2 min read
Pricing is the most important tasks when starting your food business. As a food entrepreneur, a small food processor, you are in the pleasure business. You may not see this now but there are few things today people get real pleasure from and food is one of them.
It does not matter if you bake, cook, or produce food for those with special dietary needs. Your goal should be to put a smile on the customers face. The problem that rears it’s ugly head? New food Startups treat pricing products like it’s an afterthought. It’s the last thing on their mind.
Common Pricing Errors
Food entrepreneurs are so eager to launch they forget one essential part of pricing. Digging into the cost of every ingredient. So the question of price is rarely addressed until they take their product to market. When a price is set, there is little strategic thinking associated with the final number.
Bakers are notorious for ignoring the work needed to price products. It’s easier to ask other bakers what they charge. It doesn’t even matter where those other bakers live. Unfortunately, bakers in the UK can never tell you what you charge if you live in Mesa, Arizona.
Traditional jams and jellies, selling them for $10.00 per 8-ounce jar; ignore a major pricing error. You’re offering a product that’s not unique enough to demand a premium price. Ignoring industry standards.
Think about it: If your prices don’t set you apart from the competition, what else will? If there answer is nothing, then you’re doomed for failure. So you use an exotic chocolate, spice or alternative sugar. Is the cost reflected in your price? If not, why not?
Pushing the Pricing Envelope
By failing to push the envelope (a.k.a. innovate), you’re positioning your product as nothing more than a Walmart alternative. Is that what you want?
You may know the four Ps of marketing: product, price, place and promotion. Do you know that price comes in as number two for a reason. It’s important. The reason you will stay in business.
Not familiar with how to price your product? Visit the Foodpreneur Institute’s Content Curation Corner. I have gathered the best online articles on product pricing. Remember to share the knowledge.