The 3 questions that simplify product pricing

Where to start pricing a dish? Sebrae consultant Felipe Chiconato lists 3 essential questions to set prices correctly.

Felipe Chiconato, financial strategy consultant at Sebrae-SP, shows that price formation is not just a mathematical question

Setting the correct price for a product is not just a matter of knowing how to do the math. To arrive at the correct value, you need to know how to calculate production and sales costs, of course. But entrepreneurs must also keep in mind how the competition behaves and what the customer wants.

“Pricing is not just mathematics. It is a combination of three pillars: finance, strategy and marketing”, explains Felipe Chiconato, financial strategy consultant at Sebrae-SP in a special live for iFood Entrepreneurship Week (which you can watch in full here).

Following this reasoning, he suggests starting by answering three essential questions for price formation:

How much does it cost?

Look inside the operation to understand how much it costs to produce and sell your dishes. Make a technical sheet to understand all fixed and variable costs. To help, iFood offers partners a platform, Price-R, which makes these calculations to arrive at the true cost of menu items.

How much does the market charge?

Evaluate the competition to have a parameter and position yourself. If the price of the same dish varies from R$ 9 to R$ 29, decide whether you want to sell quality or quantity. “Price is a strategic tool and sends a message. There is no such thing as good, beautiful or cheap in pricing”, warns Felipe. “There is nothing wrong with positioning yourself as the cheapest or the most expensive, but you need to deliver something proportional to what is being charged.”

What is the customer's perception of value?

For Felipe, this is the most important question of all. Talk to customers to understand whether they think the product is worth what it costs – and which points add value to them. “If I say that I work with artisanal sausage, perhaps the customer will pay extra for my hot dogs. But, if I say that the snack is more expensive because the plate is new, he might not accept the higher price.”

With these three points well tied together, entrepreneurs are on the right track to do adequate pricing and not lose money – or customers. “Many people use magic formulas or copy their competitor’s prices, and this ends up harming business performance. To have the right price, it is important to reflect on the criteria before arriving at a value”, explains Felipe.

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