Pricing ideas

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mrjosco
Posts: 37
Joined: Fri Jun 06, 2014 2:48 pm

Fri Jan 11, 2019 7:02 am

Last year I updated my prices and I think it was a big mistake. We increased our price and our traffic plummeted. Lesson learned!

I have two fixed locations outside the doors of popular grocery stores and I am going to take my prices back to the original level. Has anyone else played with pricing to find their customers are pretty price sensitive? Anyone willing to share their pricing strategy?

My goal is to have 20% COGS, so my pricing is based off that baseline. This year I am planning:

8oz - 1.75
12oz - 2.39
16oz - 2.75
*20oz - 3.39

(*not sure if I want to bother having a fourth size)

My customers often take their shave ice "on the go" as they buy on their way out of the grocery store - So I am also considering a kids 'flat top' version or some time of 'flat top' option, but I don't know how to go about that just yet.
TWH
Posts: 97
Joined: Sun Dec 23, 2012 2:22 pm

Sun Jan 13, 2019 10:33 am

Where do you sell and what kind of competition do you have? For what it's worth I think you are selling at much too low of a price. I am in Florida and at the beginning of last year we were selling 3 sizes in flower cups for $3, $4 and $5. We charged the same prices at schools and places like Sam's Club where we sell on weekends. Mid way through the season we raised our prices at Sam's Club to $4, $6 and $8 and saw no reduction in sales. Close to the end of the year we raised our prices at schools to the same price but offered students a $1 discount. Mediums now selling at $5 picked up to almost 40 percent of sales.
mrjosco
Posts: 37
Joined: Fri Jun 06, 2014 2:48 pm

Mon Jan 14, 2019 9:49 am

I am a fixed location in front of a local grocery store. Lower income part of town that may (or may not) be price sensitive.

We also tried the flower cups - but our customers loved the look, but overall didnt' like them. Our customers are buying on their way home from grocery shopping and the flower cups were beautiful and looked huge; but they didn't fit in the cup holders for their drive home.

We are in the same location every week. We see 40,000 shoppers per week - but its the same people coming by every time. It isn't like an event where we are a novelty - we are a fixed location that competes with snacks inside the grocery store and Bahama bucks a few miles down the raod. We have good regulars and the traffic at the grocery stores hasn't changed - but we made two changes:

1. Increased prices (to what you are charging)
2. Changed to flower cups (with styrofoam cups available on request)

And our sales dropped by a LARGE margin. No new competition, no other changes. This year I am going to 'reverse' the changes and see if they are the problem or if it is something else?

When we do events or are at a special location we usually do $3/$4/$5 with no issue. Our event sales haven't decreased - just sales at the fixed location.
ShaveIceSupply
Posts: 155
Joined: Fri Feb 20, 2009 11:44 am

Mon Jan 21, 2019 2:13 pm

This is quite interesting. Im just going to chime my opinion and brain storm on this. You said you did two things that negatively affected sales, one being the flower cup option and the other being the price. At the price point you are looking at and your local area demographics, I think it is mainly your price increase that hurt your regular customers as oppose to the cup. As you mentioned, the cup change option is actually attractive for clients who don't really care about the increase in your cost as long as they don't find the cup unattractive. I don't know what your price before the increase was, but if it was near a 100% increase meaning from 1.75 to 3.00 that will definitely scare people away. A nickle or dime increase would produce a lesser impact.

Maybe to boost sales back up, you can offer some new flavors, toppings, or sales incentives to get back your customer confidence.
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mrjosco
Posts: 37
Joined: Fri Jun 06, 2014 2:48 pm

Tue Jan 22, 2019 6:35 am

Thanks for the reply. I think you are right - the price increase was too dramatic. The flower cups looked great, and some people loved them - but they weren't practical for the customers who were headed home. We started giving customers and option and they choose the sytrofoam cups about 50% of the time. I think we will keep offering the flower cup, but we will have to offer it at a slight upcharge. We will use the flower cups for events, too - it really has a great visual appeal!

We are going to lower our prices back down to last years original levels (before the increase) and kick off the season with a "free shave ice" day to build up awareness. I will do some social media marketing to highlight the new lower prices too.
ShaveIceSupply wrote:
Mon Jan 21, 2019 2:13 pm
This is quite interesting. Im just going to chime my opinion and brain storm on this. You said you did two things that negatively affected sales, one being the flower cup option and the other being the price. At the price point you are looking at and your local area demographics, I think it is mainly your price increase that hurt your regular customers as oppose to the cup. As you mentioned, the cup change option is actually attractive for clients who don't really care about the increase in your cost as long as they don't find the cup unattractive. I don't know what your price before the increase was, but if it was near a 100% increase meaning from 1.75 to 3.00 that will definitely scare people away. A nickle or dime increase would produce a lesser impact.

Maybe to boost sales back up, you can offer some new flavors, toppings, or sales incentives to get back your customer confidence.
Loopdan
Posts: 49
Joined: Sat Oct 01, 2016 8:51 am

Sat Mar 09, 2019 12:21 pm

mrjosco wrote:
Fri Jan 11, 2019 7:02 am
8oz - 1.75
12oz - 2.39
16oz - 2.75
*20oz - 3.39
I'd ditch the 8oz and go with...

12oz - $2.25
16oz - $2.75
20oz - $3.25

I agree that when you see the same customers all the time you need to be more aware of pricing than when you are at large events.
mrjosco
Posts: 37
Joined: Fri Jun 06, 2014 2:48 pm

Mon Mar 11, 2019 6:25 am

Loopdan wrote:
Sat Mar 09, 2019 12:21 pm
mrjosco wrote:
Fri Jan 11, 2019 7:02 am
8oz - 1.75
12oz - 2.39
16oz - 2.75
*20oz - 3.39
I'd ditch the 8oz and go with...

12oz - $2.25
16oz - $2.75
20oz - $3.25

I agree that when you see the same customers all the time you need to be more aware of pricing than when you are at large events.
I like this plan and I think I am going to give it a go.

We are serving in foam cups again, too. I have the flower cup available as an upsell and will be used for some events because of its visual appeal. Won't really know how well it works until a few months in - but I will try to update here with results.
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