Comments on: What We Can Learn About Pricing From Menu Engineers

By: sepia•clouds - menu engineering

sepia•clouds - menu engineering — Tue, 05 Jan 2010 15:30:26 +0000

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By: Sean R

Sean R — Tue, 01 Dec 2009 00:18:46 +0000

Our firm’s currently helping a client do just this – price their menu. Your article is very timely, and I greatly appreciate your insight. I think this model, within reason, is somewhat genius – simple, but genius. Thanks for sharing as there is certainly proof in this pudding!

By: Some thoughts on marketing and user choice « NorthWind Design Blog

Some thoughts on marketing and user choice « NorthWind Design Blog — Sat, 10 Oct 2009 06:01:08 +0000

[...] What we can learn about pricing from menu engineers [...]

By: Rags Srinivasan

Rags Srinivasan — Sun, 20 Sep 2009 14:56:27 +0000

Mike
Nudging customers to pick a version that is most profitable to the marketer is a tactic – a fine tuning knob. There are several such tactics, based on behavioral economics, including prices that end in 9. But all these optimizations will still only result in sub-optimal profits if the marketing strategy is not done well. Marketing is about segmentation and targeting – finding the different customer segments, what they value and positioning versions that best appeal to them. For the restaurant case, the restaurant needs to decide the segment they want to bring in and what that segment values like ambiance, service, wine list, social status, etc.
Profit maximization requires the marketer to understand the core value proposition and what unique value they provide to their customers over alternatives. If a business fails to understand this, then any number of tactics applied will not help.

Rags Srinivasan

By: Steven Forth

Steven Forth — Sun, 20 Sep 2009 11:20:43 +0000

Great metaphor. I know from my own experience how hard it is to price offerings as a start up. Note that “market clearing” prices are only relevant for traded commodities. If you are selling a traded commodity you are probably not a start up. The key to B2B pricing is differentiated value. I have a post on this at http://leveragepoint.typepad.com/leveragepoint_perspective/2009/09/what-do-we-mean-when-we-say-value.html
In my experience psychological factors (and your pricing strategy) determine how much of the differentated value you create you can reasonably claim.

By: What We Can Learn About Pricing From Menu Engineers « Pennysaverwired’s Blog

Fri, 18 Sep 2009 15:52:02 +0000

[...] What We Can Learn About Pricing From Menu Engineers September 18, 2009 Posted by pennysaverwired in Uncategorized. trackback By Mike Speiser | Sunday, September 13, 2009 | 12:00 AM PT | 37 comments [...]

By: Mike Speiser

Mike Speiser — Thu, 17 Sep 2009 22:30:09 +0000

Thanks for the comment Gregg. And for the remarks about being honest with your customers. If you’re ever in Silicon Valley, please look me up. Would love to learn more about what you do.

By: Gregg Rapp

Gregg Rapp — Wed, 16 Sep 2009 22:19:50 +0000

Thanks, Mike! I have notes from people all over the country from your article! You sure have a great reach! Yes, Dan Ariely’s book “Predictably Irrational” really goes into the concept of pricing and gives some great examples for many industries. I do agree to be honest with your customers and always give them a hug when they come into your restaurant! Trying to trick your customer will only loose you freinds and creditablilty. In my 27 years as a Menu Engineer I have found Restaurant People as great warm friendly business owners. I have fun with the high priced items, too! It can put a smile on the customers by coming up with crazy items and having some fun! Thanks again for the mention! Gregg Rapp, Menu Engineer, Palm Springs, CA

By: Anonymous

Anonymous — Wed, 16 Sep 2009 19:51:23 +0000

Gregg Rapp is my good friend! You can learn a lot from him!

By: What We Can Learn About Pricing From Menu Engineers « BigBuzzBlog

What We Can Learn About Pricing From Menu Engineers « BigBuzzBlog — Wed, 16 Sep 2009 19:19:15 +0000

[...] September 16, 2009 What We Can Learn About Pricing From Menu Engineers. [...]

By: How do you price stuff nobody really needs? « Mobiletribe

How do you price stuff nobody really needs? « Mobiletribe — Wed, 16 Sep 2009 16:02:07 +0000

[...] set good pricepoints? Mike Speiser at Sutter Hill Ventures has an interesting post about pricing here. So would the expensive outlier help charging for our content? In most markets mobile content is [...]

By: mcmackin

mcmackin — Wed, 16 Sep 2009 15:01:54 +0000

Interesting insights.

The discussion at the end re: MSRPs spurred a couple of thoughts I think are worth exploring.

I believe there is a fine line between MSRP and street value. If the difference is too large, the MSRP is perceived as a dream price by the manufacturer. It indicates that there should have been a bit of market research to understand the true value to the consumer – regardless of price to produce. IF there is a significant difference between production price + acceptable markup and consumer value, perhaps the time is not right for the product. It is important to be able to walk away from those endeavors that don’t fit with today’s market environment.

The second thought, however, revolves around “Sale” pricing. I remember shopping with a group of friends, and picking up a kitchen gadget. We liked it, wanted it, but felt it was overpriced at $24. As we walked away, I began to wonder if we had appreciated its value more if it had been ticketed at $30, and on sale for 20% off (net $24 price.) I believe that the perceived value would have increased, in this case, because of the discount – but this too needs to be applied in moderation.

Retailers do have an initial markup, and a target markup at that they anticipate once sell-through is achieved. This would be regular price, plus any sale pricing, plus any liquidation/clearance pricing – until it is gone. If they start with a 50% initial markup, they may have a targeted markup of 40%, which allows for some reg price selling, some sale price selling, and some liquidation selling.

Great post – worth some consideration regarding pricing, as well as our own behaviors as consumers.

By: Tyler

Tyler — Wed, 16 Sep 2009 12:47:44 +0000

How do restaurants/all businesses measure the success of a strategy like this?

By: Sandbox » Blog Archive » Weekly Inspiration #9: Art 2.0, Money & Corporate culture

Tue, 15 Sep 2009 07:02:59 +0000

[...] about the science of pricing in this great article and you probably won’t look at a restaurant menu the same way [...]

By: Mike Speiser

Mike Speiser — Tue, 15 Sep 2009 06:25:23 +0000

You made an impassioned argument, but I don’t think you addressed my point. Because a restaurant takes the “$” off the menu doesn’t mean the food sucks.

By: Top Posts « WordPress.com

Top Posts « WordPress.com — Tue, 15 Sep 2009 00:06:41 +0000

[...] What We Can Learn About Pricing From Menu Engineers Let’s say that you’re an entrepreneur or general manager about to take a new product to market. How do you [...] [...]