A few months back I came for advice, desperately seeking more customers and like many others assumed having a low price means I will sell more. I took the advice and rised prices, and although it defies logic, I am selling more. The pizza, menu and marketing are still the same but are average ticket has gone from £12.50 to £16 in three months and anticipate that rising to £18 by May.
Although I have lost some customers, I have gained more new ones that spend more at a higher margin. When selling pizza in a small town its about creating a desire and convienence not price. Now I look forward to menu reprints, for that little extra rise.
Wow! What good news…thanks for bringing us up to date. All in all, I’m not totally surprised since value is frequently measured by price (a Rolex doesn’t get you to meetings on time any better than a Swatch). Of course, the product had better be good if you expect repeat business. Many years ago there was a restaurant owner in Washington DC whose marketing strategy was to be the most expensive joint in town. So every 6 months he would survey the other upscale places…and if any were priced higher than his, he would immediately raise his to the new standard. I’m not suggesting that we must have the highest prices, but the lowest prices are sometimes equated with lesser quality. Congrats on finding a functional new marketing strategy for your place…just be sure to keep the product on a level consistent with your price point.
Every time I raised prices, I raised profits. People don’t do it enough out of fear that they will lose some customers. The fact is, you do, but your ticket averages and profits go up. Good choice.
For the life of me I can’t remember which book it was in, but the story goes:
A jeweler was leaving on vacation and wanted to get rid of some silver stuff that wasn’t selling but was taking up room in his display. So he left a note for his staff, “everything in this case 1/2 price.” Upon returning, much to his surprise he found everything in the case had been sold. Turns out the staff misread the note as “x2” and instead doubled the prices.
Your prices have to fit the perception of your business or there will be a disconnect in the minds of the customer. It’s really hard make a pitch about your quality and then turn right around and discount your product. Much better to remove the risk (a guarantee), offer an incentive (free appetizer just for being one of the 1st to try it) and give reason (I know you’ll love it if you try it and then you’ll tell your friends).
