Pricing Drinks

[cafeizzi]

Just wondering is there a formula for coming up with prices to charge for drinks you sell?

 

[John P]

There are many ways, but here are a couple:

1) Price according to Cost of Goods:
Total cost of ingredients (espresso, milk, lid, cup, sleeve) *~ 3.33 (a reasonable percentage)

Example for 12 oz latte: .40 + .30 + .05 + .08 + .06 = .89(* 3.33) = $2.96--- so you could go anywhere from $2.95 to $3.05 and be safe.

2) Price According to Competition:
See what everyone else is charging, position yourself accordingly. If you're worse, charge less. If you're better, prove it, and charge more.

Bonus) Starbucks approach. Charge 5 to 10 cents more than Starbucks on any similar drinks, promote that you're Local. Adjust all other items as needed. Do you use this method and charge less? Only if you accept that Starbucks is better, which for many is true. Don't be one of them. 8)

In the end, you're a business, so you need to have enough margin. BUT you need to charge what the quality of your product will demand. No more, no less. Just be consistent.