How much should a cup of your favorite coffee cost? What key factors does the price include? Which coffee is cheaper? One will hardly find the exact answer to all those questions when considering a well-flavored aromatic drink, as we are speaking of a tasty one.
Regularly proceeding with an in-depth statistics and analysis, coffee market experts are very unlikely to reveal the truth. They know that the average price may range from $0.5 to $1 per cup of your beloved espresso or Americano. Those drinks do not require additional ingredients like milk making cost price lower if compared with latte o cappuccino. Producers and marketers benefit from enormous revenues selling their products with up to 1000% markup. For this reason, the niche appears to have a great potential for businesses, which use all possible means to protect their segment keeping newcomers away. They established an average market price, which is about $1 per cup.
You will probably ask why we do not follow this pricing strategy when selling coffee at filling stations and you will be right. Switching demand is the key reason, as it shapes the trading rules for shops available at filling stations. This is why implementing discounter principles would be wrong when establishing the right price. On the other hand, various actions featuring free coffee and additional bonuses appear to be extremely popular with customers visiting filling stations. Why is it so?
What Does It Take to Opt for A Discounter Pricing Strategy?
Although businesses will hardly amaze customers offering launches with a 50-dollar cup of coffee, some brands still make efforts to implement the discounter pricing strategy. We have an example of Coffee Fix Company. Launched its COFiCO shop in 2015 in St. Petersburg, the company offered a fixed price to all available positions. The marketing strategy was expected to be a success with the further opening of 50 more venues. However, according to the information available on company’s social network pages it can only boast 3 coffee shops with a fixed price that is higher than they planned beforehand. In other words, a discounter pricing strategy appeared to be nothing but a failure.
Hailing from Israel, Cofix appeared to be another company aiming at establishing an efficient discounter pricing strategy. The idea is to sell coffee at a fixed price without any reductions or markups. According to the information provided by the official Cofix representatives, they expect at least 1000 coffee shops opened in Russia only including 300 venues in Moscow and 700 spots nationwide.
Mass production and distribution of coffee come with an in-line business model. The idea of a fixed pricing strategy is very simple. You get high revenues due to a difference between the prime cost and the established sales price. We should note that the coffee prime cost is rather low if compared with any other product of mass production. On the other hand, the quality always matters! A single cup of coffee of poor quality will result in low sales and bad customers’ impression. This type of business includes some fundamental aspects of repeat sales principles. Major costs include rent and employees’ salary. These are actually the only sources whenever you need to reduce your costs.
We recommend being rather accurate and picky when it comes to choosing the right place for rent. As soon as you are done with the choice, you need to proceed with an in-depth marketing research identifying your target and key customers in this particular area. You need to launch an efficient marketing research to detect all key consumers’ channels that may range from educational establishments located around to transport infrastructure, cinemas, sports arenas, etc. Choosing the right location for the venue is the magic formula of success. Combine it with a perfectly tasting and affordable cup of coffee, and you will master the niche at short notice. Also, consider hiring a professional staff including experienced baristas.
Modern technologies have already taken coffee business to a new level introducing advanced and innovative solutions letting you reduce the costs and monitor the entire selling process. Whenever you want to track every cup of coffee delivered to your customers, you can implement efficient IT solutions that will prevent from any types of frauds performed by your staff. In other words, you will always keep in touch with the recipe they use and the total revenues you expect to get. Modern IT solutions will let you take control over your business without any efforts. Just lay back and relax watching your venue getting more and more prosperous each day. Related products appear to be additional monetization tool. The range is enormously wide. You can opt to a selection of items ranging from auto accessories to jewelry and hot-dogs.
Cup of Coffee for a Customer-Oriented Approach
A wise and thoughtfully arranged assortment is the key to successful sales. Knowing your range of products from scratch will let you include supportive products creating an award-winning combination of goods. It calls for a descent level of marketing skills. You may face some pitfalls before establishing an ideal list of “ingredients”, as it may take much time. However, if you succeed, you will witness the sales increase at once.
Think of all possible alternatives and substitution to be prepared for any type of emergencies. The one and only rule is to launch a smooth and trouble-proof selling reprocess. Always keep in mind that every time it stops, you start losing your money. The slightest mistake can lead to bankruptcy.
In spite of all possible drawbacks, the discounter-pricing strategy has a great business potential. They will certainly find their customers even with an100-150% to stand out from other players on the market featuring 1000% markup. We do not really care about money when it comes to coffee. This fact makes coffee market rather flexible with a place for any pricing strategy.