The subject of pricing has come up several times in the last month or so and today, Rob the BusinessPundit had a post (pointing to an article on CFO.com) that discusses the pitfalls encountered when pricing new products.
Here's my situation... Our (projected) most popular item will be the "quick fix" bag which holds about 2.5 oz of potato chips. These are what I consider a premium product because they're cooked within minutes of when a customer orders them and they are seasoned directly in front of the customer. We use only the best ingredients and non-hydrogyneted oils to ensure that they are indeed the best chips our customers have ever eaten.
The market price for a 2 or 2.5 oz bag of mass-produced chips is approximately $0.99. These chips have been in a bag for an undeterminable amount of time and can contain all sorts of preservatives and/or cooked in less-than-healthy oils. How do you quantify the premium to charge for our freshly prepared chips? I'd also like to point out that our 2.5 oz bag will more than likely be overfilled on average. Would a price of $1.49 be too high? How about $1.89? I would like to keep the average sale for a bag of chips, a small container of dip and a soft drink to be at or under $5.00. I would really like to get some feedback from the two or three of you that read these posts routinely.
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I'm a little out of the loop on prices in the US, but I don't think $2.50- $3.00 or maybe a little more is out of line for both the chips and the dip.
You’re real competition isn’t the mass produced chip for $0.99. It's other snack food in the mall, like soft pretzels, yoghurt, cookies, cinnamon buns etc. I’d look to see what these types of products are going for in your mall and work from there.
I think you have more room to be aggressive with the price of the chips than the dip. If people really want the chips they’ll buy them, but the dip should be inexpensive enough to be a quick impulse buy on top of the chips, and not a new purchase decision.
Another idea is rather than treating the dip as an add-on to the chips, why not give the combination of chips and dip and catchy name like “Chip-a-Dip.” That way people only have to make one decision, should I get the chips or the “Chip-a-Dip.” Instead of two purchase decisions, should I get the chips and then should I get the dip. More revenue per customer.
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