My wife will never believe that I am publishing this post. I know I have a reputation for complaining about the ridiculous prices that places charge these days–in that sense, I am truly a crabby old man.
However, I have seen the light. Somewhat. I have had my frustrations in the past with restaurants coming out of a horrible recession by charging higher prices. I still struggle with that a bit. But after doing more consulting, I understand why a little more now.
What is everyone else charging?
It is important to look around at the competition and see what they are doing. Not just what they are charging, but also what they are doing. In other words, pay attention to the trends in the industry, see how your competition is reacting, and then come up with a competitive strategy of your own. Pricing is part of that response.
It helps to anticipate
Doing a little research with your time away from the restaurant (hah–cuz I know you have plenty of it), will help you keep up with what is hot out there. Knowing what people are going for these days is a good place to start when figuring out what to charge for things.
Can you get it?
Then you need to be sure you can get that price. Don’t jut pull these numbers out of your you-know-what, put some thought into them. There is no point in coming up with a price, if no one is willing to pay that price. What are they charging for that same thing around the corner? What can you do with the service that might add more value to that product?
Thinking of ways to add to the service element is a way to set you apart from the competition. Maybe you are charging the same price, but you are bringing some added value if you consider ways to present it or serve it that is different than the guy around the corner. We call that differentiation.
There is a place by my house that is one of those places that I have complained about in the past, because of their high prices. However, they make sure to add value. They have attentive service, and in addition to that, they have the cool idea of offering sparkling water as a free option. A great unique point of differentiation. That is a new one that I had not seen anywhere else in Portland. How much can it cost to implement a CO2 system for our fine Portland Water?
That being said…
Charge whatever you think you can get away with! You don’t want to leave money on the table, as they say. Just make sure you are bringing the value….