Blog post 003 Lets talk about your price

Cloverleaf Family Restaurant, 4023 West 3rd Street, Bloomington, IN, has been a family owned and operated business for over 25 years.  John Byers, owner, has spent his entire life in the restaurant business and has a wealth of knowledge about being successful.

Cloverleaf Family Restaurant is open six days a week and serves breakfast and lunch.  It seats 240 people and to give you an idea of the volume they use over 1100 eggs on a Saturday morning alone!  Their repeat business is so strong that many customers will come in 2 times a day.

John could easily fill a book with his keys to success in this demanding business.  One of the things he said has stayed with me.

"When it comes to pricing it is better to have 3 nickels than one dime.  Price your menu so people will return again and again."

He is a testimony to his principle.  More repeat business than anyone I know.

Let's look at it from a sales person's point.

A business with a 20% gross profit margin that implements a 10% price reduction (either through promotion or negotiation) needs to double their sales to stand still in terms of profit! In other words, a 10% discount requires you to DOUBLE your sales to make the same gross profit!

If your price is $50 per case and your cost is $40 your are making a 20% gross profit.  If you sell 100 cases your make $1,000.

The customer asks you for a discount.  You negotiate up to a 5% discount IF they double their order.  If they agree, you just made $1,500 gross profit and your customer got a good deal.