OK very helpful on the last post, now can I ask you Guys, what way do you price, all pizzas this side of the water are priced to allow for discounts, coupons and free delivery, this makes the list price pretty expensive to start with are you guys doing the same?
While it is undeniable that pizzas must be priced to pay for free delivery, higher prices so that they can be discounted, by coupons or other offers, would be percieved as a scam by anyone who noticed. (And pointed out by all competitors.)
PD it sounds a lot like auto sales here in the US. All domestic and most Asian based companies still price their vehicles with the anticipation of large rebates even after everyone walks in expecting to pay invoice or less. The Germans still play it straight. BMW, Benz, Audi, and VW all have much lower margins and they probably lose customers more than they like to admit…and not from a higher price for a much better vehicle…but for not raising prices so they can then cut them back with rebates. It is all a numbers game. Like you said it is commonly known that you will offer coupons or discounts on the high starting price. The big problem in the states is people want a big discount on an already cut-throat price. It is putting the indie out of business and allowing the big guys to keep the garbage rolling out their doors. Sad, but the truth. 
I’m a big fan of bundling.
Take your fairly priced pizza and pair it with a high margin side item (like breadsticks) and maybe drinks or deserts to create a “meal deal.” Set the overall price where you want the food cost to be: Customer perceives value and you get to keep your food cost in line while (hopefully) increasing your ticket average. Best done when everyone is only ordering pizza.
Multi-pizza deals serve a similar function. Offer one price for a pair or trio of pizzas that would be a bit lower than ordering them separately. Again, better value perception and a higher ticket average with the bump in food cost being offset by saving labor on marginal sales (delivering a $15 order takes the same amount of time/labor as delivering a $30 order).
When bundles are priced properly, you actually WANT to push these deals on your customers. It’s a win-win.
The thing you want to avoid is offering your large pizza for $15.00 and then flooding the market with $3.00-off coupons. That is what torpedoes your value perception - offer value on the high end, don’t discount on the low end.
And if no one in your market has been willing to bite the bullet and be the 1st to charge for delivery, then you clearly have to build the cost of delivery into your pricing. Just note that some jurisdictions will call shenanigans if you advertise free delivery while offer discounts for carry out orders.
Customers expect deals on pizza around here. Coupons are the name of the game… so yes that is built into our pricing assumptions. This is especially true with the tourist market. We have a very limited ability to market product differentiation to people who don’t live here and are sitting in a condo or hotel room deciding where to order pizza.
We have one set of offers that are pretty widely published. These are always available and placed where tourists can find them. We do other offers that are more agressive targeted at getting new customers (locals) and a off season times to drive sales.
We do have a delivery charge but it covers about half the cost of delivery. Therefor the other half is built into the pricing model for a typical order. This allows us to discount multi pie orders since that cost is covered in the first $25-$30 of the order.
We have a business we inherited where everything was on some sort of deal and discounts too deep.
Our deals have halved in number and are being reduced again on the new menu due out in 2 weeks. We have 2 or 3 large size deals or 2 family size priced as Brad outlined - marginally cheaper than buying them separately. We find we sell more multi orders than singles, plus they need to buy 2 pizzas to reach our minimum order for delivery.
We do coupons again based on reaching a certain dollar value that means they have to buy multi orders to qualify. The coupons are 3 different ones for a month each and normally involve getting a free drink (our cost $1, retail $4), Upgrade from large size to family size but exempt from deals so we are only shedding another $1 vs the deal price but the customer perception is that they are getting a great deal. The other is buying 3 large or family size and getting a basic small (10") for free - cost of goods for the free $2.
All the deals are based to give the perception of getting something for nothing, but our costs are only $1 or $2 for a sale around >$25 - $40.
We don’t do $$ off but once or twice a year we do a buy 1 get the second HALF PRICE (works 10 times better than 50% off) for a very limited time and restricted to one half price pizza per order.
Dollars off cheapens your value and peoples perception is that you’re too expensive to start with where deals are perceived as getting special value. All discounts just the same but one strikes of desperation and the other as a reward to the customer.
Dave
Dave … Buy one get one half price a few times a year? We have buy one get one free monday to thursday all the time… half price second pizza is virtually standard all the time also… but our prices are probably way higher than yours…
With doing multi deals as standard we can’t do buy 1 get 2nd half price all the time, hence it is a limited special. Keep 'em lean, keep ‘em keen strategy.
By the way our prices are double to Doms, PH and Eagle Boys, plus our large are 13" vs their 10 1/2’ large.
Dave
Large is 13"? Our small is 12". Large is 16"
Coincidentally, I just had a coupon epiphany (I think). We used our loyalty program to do a survey and discovered lots of folks who want coupons (more coupons). These tend to be moms and, more precisely, stay-at-home moms. But, like you guys, I’m trying to get to fewer coupons not more. I started thinking about the $2.00 gift cards we had employees distributing and thought I could apply the same idea to these moms.
So we’re going to form the “Next Door Pizza Street Team”. We’ll accept a limited number of people who we will task with spreading our gospel - either by $2.00 gift cards, Facebook “Likes”, or other promotions. In exchange, we’ll reward them richly with coupons, discounts, and even gasp a free pizza once in a while. I’m still trying to mull the particulars over, but think this is a good way to get value for coupons. I have talked to many of these moms and KNOW that they love to work for their discounts. Their work benefits me and they get what they want. Seems like a win-win.
I’m looking for ideas on promotions/rewards so if you know any, let me know. Hopefully someone else can use this idea as well…
Patrick Cuezze
Small 10", Large 13", Family 15"
If we went your sizes we would be harassed by the Heart Foundation, and all the other groups for promoting obesity.
Dave
I sell a discount coupon sheet for $50 to $100 to people at dining in and delivery. In that sheet, there are various types of coupons. For e.g.-large/medium/personal free on large, medium/personal free on medium and personal free on personal. When they use they use the coupon, they have already paid the extra for the pizza they are ordering. So I don’t have to worry for higher pricing. The same applies to dining in and delivery.
I’m just curious, how do you advertise and sell this? Do you say “Buy our coupon page for $100 and get $200 worth of savings” or something along those lines?
A little over a year ago I changed my philosophy on coupons and daily specials and it really made a tremendous difference. I decided to start using my food costs to dictate my specials and allow perceived value to be the law, not “actual value”.
What I realized was that you discounted a large pizza $2, it would be met with mild interest, because it’s just $2. However, if you take a side item that costs YOU $2 to make and “give it away” with a large pizza, your customer views it as the menu price discount, not your cost.
So, in example a) you sold a $15 pizza for $13 or in example b) you sold your pizza for $13 and a second item at cost. You sold your pizza for the same price, which one do you think your customers are going to want more?
EDIT I realize a lot of people are going to question giving away that side item when a good chunk of the customers might pay full price for it with the discounted pizza. I was concerned about that originally, what I found is that they’ll often order another side because they’re not having to pay for something they want or it trains them to get sides next time because the pizza isn’t a full order to them anymore.