Profit Margin Target

Ask Me Anything Q&A Prisyncama
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1

BUSINESS:

Chocolate products and chocolate related events

MARKET:

Working Gen Z and Millennials based in Toronto, Canada

CONTEXT:

The majority of my business sales (90%) are derived from our chocolate events and workshops. I’m confident in our product (ex- chocolate bars) pricing, but I’ve struggled with finding appropriate prices for our workshops. I truly believe in what we offer and I think our workshops are unique.

CHALLENGE(S):

  • I find that most of my local competitors who have similar offerings charge substantially more for tickets (36%-40%) and are seemingly almost always sold out
  • When I use competitive pricing for my workshops, we either get a very small turnout or no sales at all

QUESTIONS:

  • Should I put more focus on showing customers the value of our workshops?
  • Would it be better to start with a target profit margin when determining prices?
  • Perhaps I can offer early bird or buy one get one options to encourage people to ‘bite’?
  • Any tips on pricing strategy and psychology for my sort of business?
2

If you’re not getting what you want at a 30-40% lower price point, it means that your problem is not your high prices. The perception of the value of your offering (your workshops) is not as high as you anticipate, and that might need some work. And those 30-40% lower prices might actually be affecting that perception. I am not immediately suggesting increasing your prices, but that might be worth an experiment to see how much it affects the perception of your customers.

Tactics like earlybird pricing work well with the events as they mitigate the chicken egg problem.

Or if you believe in what you offer, you may provide things like a money-back guarantee - I don’t think anyone would ask for their money after enjoying a chocolate workshop!! :slightly_smiling_face: