An article in the June 1st issue of Bake Magazine discusses Tiered Pricing, which normally refers to volume pricing. This strategy encourages shoppers to buy larger quantities of a product by applying discounts based on the quantity ordered. The article stretches the definition to a somewhat different idea, but still, it discusses how to increase your business’ revenue.
“Tiered pricing is a mechanism that allows a retail bakery to set levels of prices based on different categories — or lifestyles — of shoppers. It is becoming more common to see bakeries take advantage of tiered pricing. You can start by setting one price for the top end of a bakery category, a slightly lower price for the middle, and the lowest price for the bargain hunters. Or make it simpler for the consumer by offering two tiers of prices.
“Bakery owners agree that given the choice, the majority of shoppers will migrate to the middle. But by having a top tier, you can capture dollars that you ordinarily miss. And having a bottom level ensures your bakery will reach those looking exclusively for the best deal and build more customer traffic.”
The article also discusses other pricing tactics. It offers several ideas on how to increase sales, and talks about the importance of avoiding low-price strategies that work for large businesses but does not help the smaller business.
Another approach to increase sales: bake your products in a smaller size that may appeal to different sized families and different income levels. By making small versions, such as mini pies instead of the 9″-10” size, you may reap more sales while still having a healthy mark-up. Your signage can reflect that you also bake these products in several sizes.
Home-Based Baking at its Best! Bake Magazine is a good resource for all small home-based bakeries.