How to set prices in your café
1) WHO IS MY CUSTOMER?
Prices are determined by how much customers are willing to spend. One of the first questions you need to know the answer to is who is my customer and my target group. If your café is already in operation, take note of who all frequents it. If it isn't yet, think about who you are creating your café for.
The retired group will probably mainly want lower prices and peace of mind around them. Students, for example, will be looking for workspaces with outlets for their laptop and free internet. If you're known for providing enhanced services, customers might not mind paying a few extra pennies over your competitors.
Keep prices reasonable for everyone, but feel free to extend the offer for those who want to pay extra.
2) THE LOCATION OF YOUR CAFÉ
Yes, this point also matters immensely. If your café is in a location where a lot of people are concentrated and other businesses have set the quality bar high, you don't have to worry about raising your prices, but don't forget about the quality of your entire café. You don't want your guests to never come back after their first visit.
However, if your café is out of the area and your target customers are more likely to be people from the neighbourhood who come to you regularly, then you should keep your prices rather lower to keep your customers coming back. But you don't have to immediately hang your head that you won't make any money because of lower prices. Just think of other alternative options that your customers will behappy to pay extra for. How about plant-based milks or expanding the classic menu to include other options with a smaller markup? For example, offer the option to swap out classic baked goods for gluten-free ones.
3) THE COMPETITION AGAIN
Any competition will be with you for the duration of your business. But that's a good thing, at least it will constantly force you to keep on your toes and make your café more attractive to customers.
When setting prices in your cafe, go around to similar businesses in the area and see how their prices are. If they have them higher, find out why. Do they have better coffee or environment? Get inspired so that you can be the best!
4) ADD UP ALL THE COSTS
Now we'll tell you the sad truth. Your coffee may be the best, you may be creating unforgettable moments, but if your coffee shop doesn't cover its true costs, it will all simply be for nothing.
This moment may not be much fun, but it's perhaps the most important of the whole process. Take the time to calculate all of your true costs. Don't forget taxes, miscellaneous repairs, electricity, phone, rent, your employees, and much more.
Setting your prices will then go much better when you realize what all you actually have to pay.
5) SEASONAL OFFERS
Just as the seasons change, you can change seasonal offers in your menu to keep guests on their toes. In autumn, you can offer a pumpkin-flavoured caffé latte, or a gingerbread cappuccino at Advent time. You can choose to surprise your customers with something different every month, but this will take time.
Since these items will be limited in time, you don't have to worry about setting a slightly higher price tag for them. The customer will know that they are limited and that they may not be able to make it next time, so they will be happy to try them and pay extra.
6) THE LOOK OF YOUR MENU
Even little things like the look and layout of your menu can affect the perception of your prices. It's best to put simpler menus at the beginning (classic espresso, cappuccino, iced options, etc.) and only then the more complicated ones.
This way, customers can decide more quickly what they actually fancy and possibly continue on to a menu with more complicated options at slightly higher prices.
Tip: A simple menu with a basic menu at the forefront will help customers choose better. You don't want to confuse them right away and create barriers to them placing an order.
Use nines in your pricing! So-called Bata prices, which have a nine at the end. Espresso for 49 CZK or 50 CZK. What hurts you less?
SUMMARY
Think about how your customers perceive the price, but don't forget yourself. Try to think about how much you yourself would be willing to pay for the product you offer. Compare this price with your realistic price in the café. How does that make you feel? Try playing with the numbers in your head and experimenting. Remember that this decision is not final and you can adjust your prices slightly as you go along.