Are you constantly thinking about how to price a perfect menu for boosting your sales?
Your restaurant’s menu plays an integral role in setting your customer’s expectations. The menu is your restaurant’s vital marketing tool, as it is the first thing that a customer looks for.
While there are ample things to keep in mind before finalizing your menu. In this blog, we have covered the most important of those – Pricing.
The menu serves as a powerful tool for the restaurant operators to plan, promote, execute and control the operational process as well as the customer’s experience. The entire culinary experience of the customer boils down to their decision making which is influenced by the Restaurant’s Menu.
There’s no real one-size-fits-all pricing strategy.
But, we have listed the top 5 important menu pricing strategies which can surely help you.
1. Charm Pricing
Charm pricing is also known as psychological pricing. Odd numbers are the foundation for charm pricing. Charm pricing is essentially a numbers game and is most effective when you alter the leftmost digit on a price tag.
For example, If a cocktail at your restaurant costs Rs.200 and if you alter it to Rs.199 then it is scientifically proven that your brain processes Rs.199 and Rs 200 as values with a vast difference because of the first digit and they consider the former as relatively much cheaper.
2. Complimentary Item Pricing
Who doesn’t like discounts?!
By leveraging the discount mindset of customers, you can offer discounts on complementary items to increase the sale of related food items.
For example, you may set a low price for your coffee and slightly raise the price of your sandwiches compared to your competitors to compensate. The low priced item will attract customers, and they will be more likely to buy the slightly higher-priced item, which goes along with the former.
3. Decoy Effect Pricing
The decoy effect is a psychological phenomenon that influences people’s preferences by inferior ‘decoy’ options. The decoy is priced to make other options more attractive. Essentially, the decoy is not intended to sell, it simply pushes the customer to opt for the target (a more profitable choice).
For example, Movie Theatres successfully uses this strategy. For its main product- popcorn, theatres have different size & price variants- Regular, Large, Grand (or Jumbo). Now, let’s say, a regular popcorn costs Rs.150, a large costs Rs.300 and a grand costs Rs.340. The customers are likely to pay an extra 40 bucks and get the grand popcorn rather than a large one. Here, the ‘large’ merely acts as a decoy, making the ‘grand’ seem to be a viable option.
4. Relative Pricing
Use relative restaurant menu pricing strategies to get your customers to buy more. When you place your high-profit items next to expensive dishes, your customers are likely to order the cheaper yet the high-profit item.
For example, A normal plate of nachos can be priced at Rs.150 which would include food costs and a high-profit margin. On the other hand, you can price loaded nachos at Rs.200 which may not include the same margin. Thus, placing normal nachos next to loaded nachos may tempt the customer to impulsively order the former, thus, leading to more profit.
5. Competition Driven Pricing
Competition-driven pricing is a method of pricing in which you make a decision based on the prices of your competitors. You can conduct in-depth research about the prices that are prevalent in the market and then juggle around those existing prices. Choose the best price which would attract customers but not at the behest of inducing losses to your restaurant.
Smart pricing strategies are essential to running a successful restaurant business.
In general, your restaurant’s menu prices should be based on the type of cuisine being served, your restaurant’s geographic parameters and mainly, your target demographic. This will allow your prices to be cohesive with your brand, values and services.
Use these menu pricing strategies and let us know what works best for your restaurant.