How Do I Determine the Appropriate Price Strategy for a Delivery Food Service?

Pick the proper strategy for your delivery service.

Choosing the right pricing strategy is important for a food delivery service. The right pricing strategy will be attractive to customers and increase revenue, but the wrong strategy can turn off customers and decrease sales. There are ten commonly used pricing strategies in business: premium pricing, economy pricing, price skimming, psychological pricing, product line pricing, captive product pricing, product bundle pricing, promotional pricing, geographical pricing and value pricing. Any strategy that you choose will likely have both pros and cons.

Instructions

1. Write down a list of the possible pricing strategies that are available to you. The usual pricing strategies used by companies include premium pricing (where a service is exclusive and costly), economy pricing (where prices are kept low), price skimming (where you charge a high price if you have a significant advantage in the market), psychological pricing (which targets emotions rather than reason in consumers), product line pricing (where you offer different services at different prices), captive product pricing (where a high price is charged to customers who are tied in), product bundle pricing (where multiple services are bundled together in one offering), promotional pricing (where special prices are used to promote a service), geographical pricing (in which you charge different rates to customers in different areas) and value pricing (where a service is offered at a low price but with good value).

2. Eliminate any of the pricing strategies that are not possible for your delivery food business. For example, if you only operate in a small geographic area, such as within the downtown of a single city, then it is unlikely that you would be able to use geographic pricing.

3. Write down a list of pros beside each of the remaining pricing strategies. For example, beside the strategy of premium pricing you might write down that it provides the opportunity to achieve high price margins, making it possible to be profitable with fewer customers.

4. Write down a list of cons beside each of the pricing strategies. Beside premium pricing, for instance, you might write down that the cost of food ingredients would be higher and you would need to be able to maintain a high level of service.

5. Select the strategy in which the cons are most outweighed by the pros.

Tips & Warnings

• Focus on the strategy in which the pros most outweigh the cons. This does not mean choosing the strategy with the most pros or least cons, but rather qualitatively considering the impact of each pro and con.

References

• Marketing Teacher: Pricing Strategies