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Pricing a Cafe Menu

Considerations When Setting Cafe Menu Prices

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Having crunched all the numbers, you know exactly how much revenue your cafè needs to cover costs, remain financially viable, and turn the desired profit. But setting cafè menu prices features plenty of wiggle room, and it entails more than just overhead, targets, and lackluster accounting considerations. Setting the right prices is an integral part of branding your cafè, and there's no one-size-fits-all prescription for pricing. The right prices for your particular cafe are derived from more than an objective look at the numbers.

Consider The Competition's Pricing

In the cafè business, you don't win just by being cheapest. Quality and consistency, the level of service, location, and a myriad of other factors come in to play. That's not to say competitive pricing isn't important. Peruse a few articles written to help people save money, and you'll quickly notice that a standard piece of advice is for people to eliminate those pricey lattes. While the morning caffeine fix is undoubtedly a safe institution, there are cheaper alternatives to patronizing your cafè, and your products are considered elastic; that is, they are indulgences that are more likely to sell the more affordable they are.

When setting the prices on your cafè menu, review the competition's prices. If your establishment is more expensive, it must be because you offer something more, something the public is readily willing to pay more for. Be wary of pricing too much lower than the competition, though. While "cheap" has a strong appeal to many people in many instances, it just as easily conjures expectations of poor quality and service. Additionally, study the competition to avoid underselling at prices that are expected to be higher.

Consider Your Image and Target Market

Who are you trying to get through your doors? What demographics are immediately outside your cafè? If your cafè is located in a hip neighborhood populated with young, struggling artists and college students, your best bet is to cater to people without much extra cash to spend on your food and beverages. Price on the low end of profitability, and let sales volume carry you.

On the other hand, if your cafè is an upscale establishment marketed to middle-aged, white-collar professionals, offering expensive fare is typically regarded by this set as a marker of quality. That's not to imply a business can inflate prices unduly, but that well-to-do demographics are willing to spend a little extra provided they still perceive value. In these instances, price on the high end, and you can manage with lower sales volume. An added benefit of exclusive pricing and less desperation for volume is the ability to provide more personal, attentive service.

If you deal in specialty items for a niche market, charge higher prices. Added value comes from scarcity, and if yours is one of the only cafès around at which to buy certain products, you earn the ability to charge more for them. If you serve an all-local or organic menu, rare wines, gourmet coffee, vegan food, or something unique, your target market will pay more.

Consider Your Quality Honestly

Perhaps the most important and most difficult aspect of setting cafè menu prices is taking an honest, objective look at what you offer your customers. If you sell average products with average service, you won't be able to charge anything more than average prices. If your cafè has something extraordinary to offer, though, higher prices are justified and realistic. People will pay more to get more, whether it's exceptional service, an unwavering commitment to freshness, the best baked goods available, or anything else that makes your cafè special.

Written by: Jon Mohrman

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