Ramen Pricing

Between a $9 and $18 Ramen, why do most people choose a double digit figure?

Recently, we did a survey on Ramen and one section is on how much consumers are willing to pay for a bowl of good ramen. They had a choice from $9 to $18. This survey had 166 respondents, but 97 people chose between $12 to $18. Why?

We did some interviews and received a common answer – A good bowl of Ramen cannot be so cheap.

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This is a piece of interesting find for me because one would think that most people will pick the lowest price category. But, in this scenario, everybody agrees that you have to pay a decent price for a good bowl of Ramen.

Here are some lessons that we can pick up in the area of pricing:

1. When a lower price might backfire

This perceived price point of Ramen is similar to the perceived price point of Branded goods, what will happened if you see a branded bag selling below $100? The first question that will pop up in your mind – Is it authentic?

Remember, lowering the price is not just hurting your margin, it could impact your brand negatively.

2. Knowing the perceived price point

So, there is a need to know the perceived price point of your product or to create one. Other variables come into play (i.e. if it is a routine purchase)

In another section, some respondents commented that they eat Ramen only a few times per year. Thus, while Ramen is considered a street food in Japan, it is not seen to be a routine eat (e.g. kaya Toast, Burger) in Singapore. Thus, this raised their perceived price point.

3. The Star and their pricing

At this time of writing, Tsuta - the only Michelin starred Ramen stall in the world had just opened in Singapore, attracting queues as long as 3 hours. This 18- seater restaurant has projected that they can sell up to 400 bowls per day. Their Price - $15 for a standard bowl of Ramen.

Being a Michelin star ramen place, Tsuta can raise their price even higher, but I believe that for the quantity they are looking at to sell, far outweighs the higher price that they can command.

What are your thought about pricing or Ramen?

Ebenezer Heng chairs and speaks regularly in F&B, FMCG and digital marketing conferences. He runs a community that reaches out to 0.5 million people. Lecturer in a Singapore Tertiary Institution and advises digital marketing for Organizations such as Singapore Chinese Chamber of Commerce, National Sports Associations, People Association’s constituencies.