At least once I week I meet a food business owner who isn’t making enough money. Somewhere in the chat, we’ll talk about their costs and prices. And I’ll suggest they raise their prices.
That always triggers at least one of these responses
- “Don’t you think people would get pissed off with me?”
- “I just don’t know if I could get away with that”
- “I feel bad. Like, things are already so tough out there and now we are raising our prices too”
- “We’re already an expensive option, and I don’t want to drive away the few customers that we have”
- “I want customers to feel like they’re getting great value”
Hmm. These are reflex responses and I know that they feel like the truth, because everyone in the food industry says them. But they’re not.
I need to be honest with you:
Being the cheapest is doing nothing for your business.
You’re underselling yourself because you’re too scared to deal with slight discomfort. So it’s easier to fly under the radar, never quite making money and making things difficult for yourself. You’d rather do that than show up as the most expensive option.
You can’t continue as the low-budget option.
So here are a few quick thoughts on why being the bargain isn’t good for your business. In fact, it’s harming it.
If you’re the cheapest, no one thinks you’re the best. If you’re the best, no one expects you to be the cheapest.
How many times have you glossed over the cheaper dish soap when grocery shopping and picked up the more expensive? Because the more expensive one must be better, right?
I rest my case.
Competing to be the cheapest is literally a race to the bottom.
You’re pricing yourself compared to your competitors. But what if they’re desperate? What if their business is failing? What if they’re pricing based on you?
You don’t know. You’ll keep undercutting each other until neither of you is making money. Have the confidence to charge what you’re worth.
Your goal shouldn’t be to offer the lowest possible price. It should be to provide the greatest value.
If you’ve got the best quality and promise, you’re definitely offering amazing value.
Pick two: good, fast or cheap.
There’s a reason this is called The Golden Triangle.
Good and fast both need people, equipment. Cheap means you’re sacrificing quality in raw ingredients, and you have fewer people on hand so you’re not fast.
The person offering the cheapest is usually cutting a corner somewhere.
It’s better to explain your price and value once than have to apologise forever for a poor quality experience.
I’ll take one uncomfortable conversation and learning over years of shame anytime.
When people STOP buying completely you might be too expensive.
If you’re selling ANY you have proof that people can afford it. Your job is to find more of those people.
Not many people are price shopping to that extent. They’re not going to your competitor because of a fraction in price. They’re going because the value was better communicated.
I know you think that is why they went there. But people are going to your more expensive competitors too. Being a tiny bit cheaper won’t influence someone’s decision. Do you know what will?
- When they can see it will be worth it
- When it’s presented as the only option
- When other people have told them how good it is.
None of these has anything to do with price.
Stop making price your excuse.
Is your costing on track? Pick up my Intro to Costing Workbook below and find out.
