Pricing a product is not just a matter of finding a magic number; it is a matter of understanding your target customer, and why or how a certain strategy succeeds or fails over time. And while there are tons of tips and tricks out there for developing a pricing strategy, few resources provide examples specific to the food and beverage industry, and even fewer explain why those strategies work better than others. We dive into the how and why certain pricing strategies work, and show them in action in the food & beverage space.

1. Pricing Strategies
That Work: Food &
Beverage Edition

2. A pricing strategy is developed
as part of a business plan. It’s
the method used to price
products or services.

3. Sounds pretty simple, right?

4. Maybe not...Developing a pricing strategy involves a lot more
than simply settling on a number and praying it
generates revenue. There is a ton of science and
research that goes behind price strategizing, and
what works in one industry isn’t always going to
translate when applied to another.

5. For example, a month-to-
month payment plan might
work when selling a big-ticket
item, but would be silly to apply
to a food or beverage product.

6. Pretty ridiculous, right?

7. But it seems like when you try
and find information on this
stuff, you get long, exhaustive
lists of strategies unspecific to
your product category.

8. That’s why
we’re here.
In this presentation, we will list ONLY the strategies
that apply to the food and beverage industry.

9. Let’s get started.

10. Use Charm Pricing
⊸Adjusting price slightly to catch
the shopper’s eye
⊸Utilizing “9s” in your pricing
⊸Tricks the mind into seeing the
price as much lower, as people
place higher importance on the
left-most digit

11. Shoppers will perceive this
as an entire dollar
difference before realizing
the reduced price is
actually only a cent less.

12. Focus On Price Congruency
⊸Use smaller font with smaller
price when reflecting a discount
⊸Congruency of size and value will
make the price drop seem larger

13. Bigger might be more eye-catching, but keeping font size
congruent to value emphasizes the price difference.

14. ⊸ Adjusting your price to differ across your
product line or to differ from a competitor’s
increases likelihood of making a sale
⊸ Identical prices for similar products make
people overanalyze product qualities
⊸ Different prices make the products seem
more similar and less likely to provoke
“buyer’s remorse”
Implement Slight Differences in Price

15. Wait, what?
What does all of that even mean?
Different prices increase perceived
similarity? If that last slide confused you
a little, here’s a quick simplification of
the Yale study that supports this
theory.

16. Meet Sue.

17. Sue went to the store, and while there, decided to grab a drink. But with
so many options all priced the same, how can she decide?

18. After a few walks up and down the aisle, she throws her hands up in
frustration and abandons the purchase altogether.

19. And…?
Well, let’s see what happens when we
adjust the prices slightly.

20. Awesome! Sue now sees that the products aren’t all that
different, and is no longer worried about regretting her
purchase later. She makes a decision, and you make a sale!

21. In the actual study, only 46% of participants
made a purchase when the prices were
identical, while 77% made a purchase when
the prices were slightly different.

22. Provide Reasons for Discounts
⊸“Summer Sale!” “Clearance!”
“New Year’s Discount!”
⊸ Providing a reason for a sale
implies it is a limited time offer
that should be taken advantage of
before it’s too late

23. Strategize Word Placement
⊸Place words like “low” and “small”
near the price on a package
⊸Creates an association in the
shopper’s mind between the word
and the price

24. Low calorie or low
price? Whatever it
is, at a glance my
brain says, “buy it!”

25. Address Pain Points
⊸Replace the pain of paying with
the pleasure of reward
⊸Examples:
▫ Points/rewards system for
repeat customers
▫ Use “feel good” words on your
product packaging
▫ Bundle packages

26. Did you know?
A joint study by Carnegie Mellon, MIT, and Stanford
found that the brain responds to the pleasure of
acquiring an item and the pain of spending money
the same way it responds to other sensations of
pleasure and pain.

27. Here’s proof: actual
brain images from the
study. We don’t really
understand them
either, but they’re
kinda cool to look at.
(Source: NeuroImage, Vol. 18 Iss. 2, 2003)

28. Remove Currency Symbols
⊸Currency symbols immediately
communicate an expense
⊸ Removing the currency symbol
from your price softens the blow

29. Emphasize Inherent Costs of Product
⊸Certified organic? GMO-free?
Fair trade certified? Tell your
customers!
⊸ People are willing to pay more for
products that seem expensive to
produce

30. Some labels worth bragging about to
consumers:

31. Use Small, Incremental Price Increases
⊸Price increases should take
place slowly over time
⊸Price changes should adhere to
Weber’s Law of the just-
noticeable difference -- usually
about a 20-25% change

32. What is
Weber’s Law?
A law in psychology that says the
just-noticeable difference is the
minimum change necessary for
people to take notice of it.

33. Here’s some super smart
professor that explains it a
lot better than we can.

34. Long story short: Make price
increases that most shoppers
won’t notice, and price
decreases that they will.

35. ⊸ Downsize a product slightly to
cut costs instead of raising the
price
▫ Also adheres to Weber’s Law
of the just-noticeable
difference -- don’t downsize
too much
Downsize Product, Don’t Raise Price

36. Try Price Anchoring
⊸Context matters
▫ You might not pay $16 for a
cocktail at a dive bar, but
would happily hand it over
at an upscale lounge
⊸An “anchor” price gives your
prices context

37. This guy applied the idea to
magazine subscriptions -- we’ll
explain how it can apply to
food and beverage next.

38. Now, here is the
experiment, food and
beverage edition. Let’s
assume making the
green and red sauces
costs the same, and
the special recipe
sauce is more
expensive to make.

39. Having one of the
“regular” hot sauces
priced the same as
the “special” hot
sauce serves as a
decoy, and will get
more people to buy
the special recipe hot
sauce. Who wants
regular when you can
have special for the
same price?

40. Here’s another way
to spin this strategy:
Now let’s say all
three hot sauces
cost the same to
produce. In this
example, the
special recipe sauce
serves as an anchor
to which the other
prices will be
compared.

41. A hot sauce that
costs nearly $7
makes one that
costs around $5
seem like a bargain.

42. To summarize: Decoy and
anchor prices can help
influence shoppers to buy the
products you want to sell.

43. By now, we’re hoping you have
a good idea of what direction
your pricing strategy can go.

44. Keep in mind that each
strategy is not mutually
exclusive from the next. A truly
successful business plan
combines multiple strategies.

45. For more information on the
science behind pricing
strategies, or to get more
ideas, check out this blog on
pricing psychology for the food
and beverage industry.

46. From all of us here at Repsly,
we hope this was helpful, and
good luck!