Hey Seller Community! Hope you're all having a wonderful week โจ
This week's question is...
How do you determine or calculate your pricing? ๐ท
Do they come with preset prices? How often do you adjust them? Can't wait to read your replies!
@QuokkaCoffee Margins on ice cream and other frozen treats are already pretty good as it is. And I spent a lot of time over our closed months buying up all of the product that I could before we opened, since I could see that the prices werenโt going to get better for probably a year. But when we blew through that product, inflation hit me square in the face. The worst part of it for us was the freight costs, especially on our basic soft serve product. Those have gone up over 100%, which is a huge impact given that Iโm limited in where I can source that.
Honestly, if I were going to pass my entire costs on to my customers, I would have had to raise prices by at least 30% and in many cases 50%. Iโm not sure I could have done that. So we decided to share the pain with our guests โ they eat about 60% of the increased costs and we eat the rest. Also, for now, we are not applying our markup rule for the added costs โ we are assuming they will be temporary (ie - this season only) and only adding the extra costs to our selling price โ no profit. For now, it is working, and the customers are by and large none the wiser. But, I have the advantage of not having indoor seating and the massive overhead associated with that seating. So we can do this, for now.
This is the area where I said being in a diverse socio-economic neighborhood is tricky. Many of my customers count not afford the drastic increases Iโd have to make if I passed everything through to them, with overhead. So I try to carefully balance it, praying to whatever gods exist (if any) that this will break sooner rather than later.
Gauges of success? Thatโs easy for me. It is my basic line of frozen treats โ dishes and cones. As long as my CoGS remains relatively consistent (since that line is 75% of my sales), we will survive and even thrive. So far, weโve managed it.
@PartyManiaMD Itโs still $7.25/hour in my backwards-looking state (the tipped employee minimum is still $2.13 here), and probably would be lower if the powers that be thought they could get away with it! Ha.
That brings up an interesting phenomenon Iโve noticed. Our customers know (because we tell them so) that we pay our employees (all high school or college age kids) a non-insulting, NOT $2.13 hourly wage, that they pool all tips received and that we guarantee they will receive $x in tips/hour every week or we make the difference up. Since we started making that fact common knowledge, weโve actually seen an increase in our average weekly tips. Customers love our employees and reward them. It makes working in this seasonal ice cream shop pretty lucrative for someone 16 or 17 or 18 years old.
The point of that aside is that customers notice more than we think they do. They listen. As long as we are open and honest with them without complaining and blaming others (the government, the shippers, etc, etc, etc), they usually respect that and show that respect with their loyalty.
