Value Pricing for Cafes | Singapore

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We all know that things are sold at different prices at different locations. For example, a can of Coca Cola will cost more if you buy it in a cafe versus a coffee shop in Singapore.

So is the cafe trying to scam you? Will you buy?

The fact is: you will still drink coke in a café. You know it is more expensive for a variety of reasons: the better ambience, the higher level of service or even the location. You are paying more for the additional value added by the café to your coke drink.

Of course in an ideal situation, if you had set up a particular concept or themed cafe, you will likely not just sell Coca Cola. You will need to have an offering that is unique.

This will allow you to price your products at the correct values and your customers will feel good paying for them. It is very important for consumers to feel good after buying your products. The perceived value of your product is actually more important that the face value of it!

Think for a moment, why would you pay $9 or more for a siphon coffee when you know that the actual cost of the coffee is probably less than a dollar?

The reasons might be that it’s “cool” to drink coffee that had been brewed with the complex siphon process or the “instagrammable food” factor and of course, you look forward to learning something more about siphon coffee after tasting it.

All these values are what you perceived, it is neither written nor marketed.

You will feel good when you received this value, so much so that the taste of the coffee might not matter that much.

And one of the reason why some cafes in Singapore are closing down is because while trying to meet their top line (sales), they totally ignored this factor of value pricing.

Value pricing helps to build up your positioning and of course your branding. Otherwise, you become a commodity. As we all know, when we shop for commodities - always go for the lowest price.

At the time of this article, Bread Talk Singapore has ceased their sales of Soya Bean drinks. They did this because of a Facebook post sharing that their Soya Bean drinks are not freshly made in-house but poured from a RTD Soya bean drink.

If you had read the article, you would have noticed that the main bug bear that got people to share and shame this company is not so much about using RTD (Ready to drink) format, but why they are charging so much for it.

I bring you to two points:

1. BreadTalk’s position of Fresh Soya Bean drinks enables them to use value-based pricing and sell the drinks at a higher price.

2. Consumer must feel good about paying for it.

I do not think that there is any issue with Bread Talk charging more for the soya bean drinks but because of some miscommunication, consumers felt cheated.

And this is what I meant by perceived value is not being satisfied.

So, do not feel bad about value pricing your product but augment it such that your customers feel good paying for it.

About the Author:

Ebenezer Heng runs a community that reaches out to 0.5 million people daily (Oncoffeemakers.com’s digital assets). Lectures in a Singapore Tertiary Institution and advises digital marketing for organisations such as Chinese Chamber of Commerce, National Sports Association, Constituencies.