A couple weeks ago, I learned that Canada will be doing away with the penny.
Well good riddance. Those things were heavy anyway.
Naturally, a change in currency made me think about the potential impact on prices, and equally naturally, I started thinking about restaurant pricing. Because, after all, I’m always all about food. Especially alternatives to instant noodles.
The price at which you set your products can be one of the most important aspects of a marketing mix, and there are things you can do to push certain dishes or cultivate a certain image for your business.
- Anchoring. Decisions are often made relatively. Your most expensively priced dish serves as a mental anchor for the rest of the items. Typically, patrons order dishes near the top, but not the most expensive dish. So make sure the item(s) you want to push are priced under the most expensive item.
- Relative pricing. Kinda like anchoring. If you want to push one dish over another, add a dish that is similarly priced but sucks as an offer in comparison.
- Rounding. Ever feel like $x.99 anything looks cheap? Rounding your prices makes the restaurant look upscale. 43% of restaurant managers (and 83% of those who used round prices) felt that customers associated round prices with high quality. This extends to other industries as well. One study found that Neiman-Marcus used round pricing of 84% of its items versus 1% for Kmart.
- Reference prices. Customers have a general idea about the price range for certain items that make comparing easy. Examples include soft drinks or hamburgers. Unless you’ve got some unique spin, price those items within the reference range for your restaurant’s positioning. Otherwise your restaurant may be perceived as being higher priced based on a few popular common items, even if your prices might be lower overall. Then again, sometimes creating really expensive hamburgers can work for publicity.
- Dollar signs. Don’t. Interestingly menus without the price caused patrons to outspend parties who got menus with dollar signs. Perhaps getting away from thinking money makes the spending decision easier?
Just some food for thought.