KMA Goldmine TV Episode 35 – Pricing Strategies

“KMA GOLDMINE TV EPISODE 35 – Pricing Strategies “

 

 

In this video Kim talks about clever ways that Costa Coffee and other companies display pricing and the different pricing techniques they use to make a sale!

 

Hi, it’s Kim here from KMA Accountancy. I’m in Costa Coffee and it just got me thinking about pricing. A lot of business owners just have one price so potential customers or clients have to take it or leave it. Costa Coffee don’t do that. If you look behind me they’ve got a board and you can buy small, medium and large in essence, okay, because they know that they get all different kinds of customers in here. They get very young people to very old people and everybody has a different opinion of what they want to drink. It’s proven in pricing psychology that people like choices, you know, and three is the optimum number, but equally you’re dealing with all different age groups, different tastes. And people sometimes don’t want just a small drink. They might be quite thirsty, so they want a really big drink, equally, some people may be really quick, so may want something that’s smaller to drink it quickly and get out the door.

Costa have worked out that they’re more likely to make sales if people can have a choice and equally it means that somebody might be tempted to go large. You know in truth, there’s very little extra costs for them, just a bit of water and a bit of coffee, so it’s really more profit for them. So that might be an interesting concept for you to consider in your business if you’re not already doing so, you know, how are you packaging stuff up? Could you have a small, medium and a large option because you’ll find that actually the cost to produce are very, very similar and you’re missing a trick if you’ve not got three options.

Another thought on this is Universal Studios in Florida. Don’t know if you’re aware, but they have what we call a Fast Pass. Now for $70 a day you can purchase, one of 1000 Fast Passes. They don’t have loads because they couldn’t cope with it. Now there will be people who would never ever dream of paying an extra $70 because, let’s be honest, it’s not cheap to get into Universal Studios in the first place, but some people will pay that because they value what it buys them and it buys them the ability to fast track and jump the queues. So if you’ve got, you know, spare cash and not a lot of time you may want to do that. Now, some people won’t as I say, but Universal Studios know that not one size fits all like Costa. So they know that some people will pay that $70 so they in essence are making $70,000 a day, which means that if you multiply that all out that’s an extra $25 million per year that was just on the table and wasn’t being taken up before they introduced this.

And in truth it’s going to filter right down to their bottom line as profit as there is very little extra cost involved for Universal Studios, a bit of extra cordoning off, and maybe a few more people looking after the queues in terms of staff, but they’ve got it down to a tee. Now, if you’re only doing one price point in your business, you could be missing out. So maybe it might be something that you might want to consider in your business. What’s your Fast Pass or what’s your large coffee?

That’s it from Kim at KMA Accountancy, the most recommended and referred Accountant in South Manchester and Cheshire.

 

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KMA Goldmine TV Episode 35

That’s it for this week’s edition of KMA Goldmine TV until next week.

If we can help with anything included in this edition or if you’d like to talk to us about anything Accountancy or Business Development, please get in touch.

Call us now on 0161 410 0020.

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0161 410 0020
info@kmaaccountancy.co.uk

KMA Accountancy
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Hale
Altrincham
Cheshire WA15 9NZ

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