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Right guy, another discussion has started to ramble on a different thread, so want to funnel it into here.

 

Drink prices has long been a real thorn in my side. When I started at Coffee Aroma, I didn't really mind the £2 we charge per most coffees. However with increased knowledge, realisation of our workload, and understanding of coffee prices, I started to get annoyed.

 

We were slowly becoming the cheapest coffee shop in town. Cheaper than the chains that buy cheap coffee, use the most efficient and cheapest method of coffee production, and cut corners in many places.

 

I had a real issue with this, why should we have to charge less than these giants. We are quality, we put in the work and the passion, and we buy expensive coffee to guarantee the quality we expect.

 

However, this seems to be a mass discussed point. Should we really drop our profit margins just to give people an easy option to swap from the chains, or should we charge what I think we deserve?

 

Chris

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You see, not working in a sit-down cafe, I'm coming at this from a different stand point. We had to pull people from the coffee giants, and get them into a train station for their coffee, and we've done that, simply by charging less for coffee that is vastly superior. I think lower prices are a way to drag people from Starbucks and Costa, and show them what coffee really can be. Again, I'm working in a train a train station and as such coming at this from a very dfferent angle to Chris.

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(from another thread).....As for price, I think the chains like Starbucks have done a great service to smaller coffee shops, if you charge about the same or a little more than say Starbucks for a better quality product your customers will pay that (I do, and I am Joe average). Selling cheaper than say Starbucks for a better quality product seems a strange business decision, but I guess each coffee shop needs to weigh up its own strategy. Obviously if you are not a sit-down cafe you need to reflect that in your prices, but you could still charge an almost similar price rather than under-cut too much. Possibly the introduction of a loyalty card and a free drink every 12 visits would be better than just cheaper prices ?

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See I'm not so sure that Starbucks pricing has helped the coffee industry. Look at any other high end drinks. Wine, spirits, beer, etc. all charge a premium for the high end products. Yet in coffee the premium charged for coffee is already lower than all of these, and Starbucks with their expensive prices, have created a weird atmosphere were consumers expect to pay less, for a better quality product in a lot of the speciality coffee shops.

 

This thereby ties our arms into charging less than Starbucks, or charging more and losing custom.

 

Chris

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I am against using price as a weapon to compete with the chains. If it really comes down to it their economies of scale will always give them the advantage.

 

When I look at the pricing on a menu I, like most people, equate price to value/worth. If the espresso is very cheap then I assume it will not be very good. Pricing should make a statement of quality. That doesn't mean you have to overcharge, especially with us all getting a bit uppity about the economic climate, but nor does it mean we should undercharge. If your product is better, has more value then it should have a higher cost.

 

It is important to remember that you can't have every customer, so don't pander to every customer. Go for the ones you want - the quality driven, and therefore loyal, customers. Incentivising loyalty (cards etc) is a great idea, its tribal and inclusive and doesn't really devalue the drink the way things like coupons do.

 

Ok - rant over for now.

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I agree. Nothing annoys me more than when I see coffee shop offering deals like "free coffee with every sandwich". It makes you wonder if they are a coffee bar or a sandwich shop. Talk about devaluing the brand.

 

I think to be honest, it's quite hard to overcharge for coffee. If customers will pay for it, then charge that amount, profit margins are so low in coffee shops, (the net margin that is). I don't think we should go out the way to screw over customers though, however, undercharging in my opinion is more damaging than overcharging.

 

I also agree that not all custom is good custom. We had someone come in the other day and ask for a Nescafe, luckily I wasn't behind the bar at the time, I hate when customers see me cry!

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I have to admit, for a sit down coffee bar everything James and Chris said is perfectly valid. At a sit down cafe you expect some level of quality, and it's easier to charge a higher price for coffee. This is because people have the choice to sit down and enjoy some level of luxery, as well as a fantastic coffee. The main problem with working in a train station is that there is little to no expectation of quality, and therefore we have to poach customers as they walk past, pulling them in before they reach a sit-down cafe. This is where using low prices and so called 'meal deals' becomes essential to the survival of the buisness.

 

On the other hand, charging too little, or boasting about your low prices is a little far. In my opinion the prices we charge at Coolaboola are fair, yet inviting. 1.80 for a 12oz latte, or 2.10 for a 16oz is cheap, yet fair. It both pulls people in away from the crap Nescafe served by the newagents in the station, while at the same time promising quality. That's my opinion anyway. But I do hasten to add that this is coming at the whole discussion from a very different angle, that of a small train station kiosk, as opposed to a sit down cafe.

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How about charge just a little less than the customer is prepared to pay?

 

The balance that amount with the common coinage so that it is easy for you to make a value added sales without them getting another coin out?

 

So I have a site charging £1.30 for a cappuccino, cheap yes but a difficult crowd, but I have plenty of add-ons that sell for 70p knowing a number of them will pull 2 x £1 coins out or a £2 coin.

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We try and model ourselves on what we perceive to be a more traditional coffee bar. We don't offer different sizes, keep modifications to a minimum, and don't charge for most extras. We offer free extra shots of espresso, free syrups, and most of our drinks prices are the same, £1.97.

 

We do this because I think people are already overwhelmed when they walk into a speciality coffee shop, similar to the panic felt by a lot of people when they see a wine list in a good restaurant. And the more modifications or options, can just worsen this effect.

 

We are actually currently redesigning our menu, with a 'classics' section and then a more adventurous section, just to make things easier for people.

 

Chris

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There is more to Adam's point than meets the eye. There are a lot of places that form their prices into 'deals' which are priced at a rounded amount, thus avoiding the need to give the customer any change at all. A vast amount of things sold at football grounds are now 'drink-and-snack, £5', partly for speed of service in forcing the customer to give exact money, because counting out change takes time, but also partly to round things up to the highest acceptable price. Would that work at a train station in the rush-hour, Seamus?

 

-Ian

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Hmm, it seems close to forcing someones hand. a kind of "we are going to price our stuff awkwardly, unless you spend more than you initially plan". Where I work, we don't do pricing deals, as we feel that we price our produce at the price we think people should pay. We do offer a loyalty card however offering 10th drink free, to award the fact people are snubbing the chains that our city is full of.

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Well, we have a DIY filter policy. We do pump-action filter pots which we put on the counter next to the sugar and milk, and people who want a filter do it themselves, and leave a pound, or 1.20 on the counter for us to pick up when we get a second. The prices, we keep as low as we can, because we don't want people to be turned away by high prices (especially since we have three schools in our area), but we don't intentionally price things so that they add up to a round number if you buy certain things.

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thats sounds like a good idea. I guess with filter coffee we chose to in the opposite direction by offering the more expensive coffees, done to order in a chemex. It just goes to show how different the model has to be between a sit down coffee in a rural city, against a stand in a busy metro station!

 

 

Chris

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