Saturday, March 24, 2007

Pricing as Marketing Strategy, Part I

Not exactly "History, Religion, Epistemology" or any of those other subjects I said this blog would be about. But maybe I need to shift my title.

Marketing is a form of communication. So maybe I can get away with these "side lights."


Our extended family has been meeting every Sunday afternoon for more than a year at a local Thai-Chinese restaurant. Their food is amazing. And amazingly inexpensive.

Then, a few weeks ago: Disaster!

Friday evening, a group of us went to the restaurant and the service was terrible. No one took our order for a good 20 minutes. Normally, they are so solicitous. That evening, they didn't even give us water for 20 minutes!

Eventually the food came . . . dribbling out over a longer-than normal period. And one member of our party never got served.

Twenty minutes later, after everyone else had finished eating, her meal came.

"Excuse me?!?"

We asked for take-out packaging and the person who sat through everyone else's meal headed out for her next engagement.

Well, we went back Sunday afternoon, hoping for a much better experience. But it was not to be. Terribly slow service once more, and one of our party got skipped again for 15 or 20 minutes.

I spoke to the proprietor.

"We have had a hard time getting quality help," he said.

"I think we will stop coming for a while until you can get your organization back in order," I said.

And so we skipped a week.

Meanwhile, I got thinking: They need to raise their prices! They've got great food. But they are going to go out of business in a flash if they can't get it served right. It's simply not acceptable, socially, to enjoy your meal while another member of your party sits hungry. And if you don't eat it when it is served, you can't enjoy the food as it is meant to be enjoyed.

So last week I spoke with the owners: "You need to raise your prices!"

"We've been thinking about that. Maybe 25 cents an item."

"No!" I said. "You can . . . and should . . . raise most of them far more than that!

I am deeply concerned that if they don't raise their prices . . . significantly, and soon . . . they're going to go out of business.

I need to get them a copy of Larry Steinmetz's How to Sell at Margins Higher than Your Competitors.
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