How to choose the best pricing strategy for restaurants?
How to properly set a price that won’t discourage customers and will ensure a high-profit margin? What should a delivery restaurant keep in mind while determining prices? Today we will tell you what are the best pricing strategies based on pricing psychology.
What is pricing psychology?
Pricing psychology assumes that prices can have a big impact not only on sales but also on a restaurant’s reputation and ratings on the Internet. Before we talk about how to use pricing psychology in practice, let’s start by discussing what to keep in mind when valuing dishes in your restaurant.
Pricing of menu items
The restaurant owner will want to sell dishes at the highest possible price in order to generate the highest profit. After all, there is nothing wrong with that – a restaurant is an ordinary business, the aim of which is, above all, profitability. You need money to pay for the premises, employees, ensure high-quality products and hopefully keep some profit to yourself, which is often not that simple. On the other hand, customers always prefer to pay less than more. What to do to prevent the high price from adversely affecting the restaurant? When setting prices in the menu, pay attention to the following points!
- Remember that the consumer is guided by emotions when choosing a good or service. A large part of purchasing decisions are made on the spur of the moment and subconsciously – there is no room for in-depth analysis and comparison of offers. Knowing this, you can adjust your prices to make them look more appealing to a potential audience. Keeping in mind the points below, you should not be afraid if the individual prices are higher than those offered by competition.
- Customers often equate prices with quality. When selecting prices, it is worth paying attention not only to the cost of raw materials, but also the location of the premises, the atmosphere, the manner of serving and the entire visual background. Determine how you want your restaurant to be perceived. Is it a premium place, a family pizzeria, or maybe a student-oriented restaurant? Pay attention to your competition and what their pricing strategy is.
- More is not always better. According to the paradox of choice, the greater the choice, the more difficult it is for the customer to make a decision. Think about it when deciding on the number of items on the menu.
- When pricing the menu, it is worth considering the customer’s needs. It is essential to strike a balance between maximizing profit and buyer satisfaction. Therefore, the pricing of your products should be beneficial not only for you but also for the consumer.
You already know what to look for when selecting your prices, but how should they look like to encourage the consumer to buy?
Simple tricks to make your menu more attractive
Use a more expensive dish as a lure at the top of the menu
This simple trick is to persuade customers to choose cheaper items on the menu. While the first item will seem expensive to them, the rest of the dishes will appear more advantageous, which will encourage customers to place an order.
Remove the currency sign from the menu
Regardless of what is on the menu, the price will always be the less pleasant part when ordering. Removing or reducing the “EUR” sign will help to divert attention from the total cost of food ordered by the customer.
Attract your customers with charming prices
Charming price is a common tactic that is used even in supermarkets. It is based on slight price changes – literally by one penny. It turns out that a small change can have a huge impact on customer perception, and their purchasing behavior.
Charm your guests with delicious descriptions
According to research conducted at the University of Illinois, menus with detailed descriptions of dishes sell about 27% better. The more words you use in the description of the dishes, the lower the price will appear to your customers. It will make them feel that they are gaining more value for the money spent.
Get them on the hook
In order to encourage customers to order more dishes, it is worth considering introducing promotions or discounts. It’s hard not to pay attention to bargains, and in the end, everyone likes to gain something!
What is worth remembering?
Once you’ve decided to make changes to your restaurant’s menu, it’s important to communicate your decisions with your team. Your employees should be kept informed about price changes – preferably well before their entry into force. After all, they are in contact with the customers, and they advise them when choosing dishes.
You have a very difficult task ahead of you. As a restaurateur, you are responsible for finding the best place in your price range – the lowest price you are willing to sell, and the highest price your customer is willing to pay for your product. We hope our tips will help you master this process, and make better decisions.