Tip: There's a Wrong Way To Raise Prices for Bulk Orders

Friday, February 19, 2016

I went to my local burrito shop and took a hard look at its menu. Something jumped out at me. Can you see it?

Here's a hint: look at the text in the big red box.

The larger size has a higher unit cost!

The four-ounce serving of guacamole costs more than twice as much as the two-ounce serving!

This makes no sense at all. Anyone who wants guacamole will simply order some multiple of the smaller containers. There is no rational reason to purchase the four-ounce size.

So it's a trick, right?

I don't think so. This isn't like the movie Office Space wherein characters plan to make fortunes from millions of tiny pricing tricks. The restaurant probably sells a mere handful of guacamole containers each day.

I suspect that the restaurant's managers simply made an arithmetic mistake.

The lesson? Anyone who notices this pricing snafu will probably think a bit less of the restaurant - it's a tiny signal of sloppiness. I'm still going to eat the burritos though (just hold the guac).

There are better methods to increase unit prices on bulk orders, and they are a lot like the strategies laid out in last month's article How To Raise Rates. Hint: offer more value. How about a special four-ounce guacamole and fried yucca bundle for $4? That pricing makes a lot more sense.

This restaurant's pricing mistake was minor. You may not be so lucky. Contact us for a pricing consultation.