11–20 of 102 posts
Not only did it insult my definition of a 'nice meal', but also made me not want to give them any more money for 'nice meals'. A nice meal is 700 calories from healthy sources. An extravagant meal is the price they quote.
Similarly $5 is not the price of a coffee... It's about 30p.
I've always hated it because it makes the assumption that everyone is at the same position in the class hierarchy - I'm poor, the last time I drank a coffee shop coffee was something like 8 years ago and even then it was bought for me by my psychologist, your 'cup of coffee a day' price just sounds extravagant to me.
It's funny because I've often had the opposite thought. Cafes should sell subscriptions. The margin on a single cup of coffee is humongous because there's so much overhead in running a cafe and such variable demand. That seems like a perfect business case for a subscription model.
Sounds like a great way to end up with a cafe full of freelancers working on their macbooks.
You're better pointing out how much it will cost a business in time and money to solve a problem themselves and compare that to the cost of your product. If you're selling too cheap, the problem probably isn't big enough or important enough.
Now for those who actually do buy their coffee daily, it still assumes Also,it still asdumes a sort of laziness in personal budgeting. If you keep a personal budget and diligently track luxury extras like buying coffee at many x the price if making your own, and a the other little things, then you're going to be very aware and deliberate about incurring additional expenses of that sort. And so if you position your value-proposition in terms of "only a cup of coffee" instead of the value-add of the service itself, then you're automatically poorly targeting your message to the entire population of people that keep careful budgets.
There is little need for opinions here - just A/B test and see what works better.
Earlier quoted context omitted.
Sounds like a great way to end up with a cafe full of freelancers working on their macbooks.
That's a good "problem" to have if you price and market it correctly
I disagree with the posters above who say there's a 90% markup on the coffee. What you're buying at Starbucks isn't a coffee, but a coffee plus the right to sit at a table and use the wifi for an hour or two. And as OP points out, at the moment, this is pay-per-use: when I need a place to sit down for a bit, whether in my own city or some other city, or when I need a table to sit and chat with someone that's not in either of our homes, I buy the right to take a seat for $4. They even give me a cup of coffee to go along with it.
Making it a subscription would completely change the way I related to such a business. I mean yeah, I wouldn't have to drink coffee just to sit down. But I'd be thinking each month -- am I getting a good value out of this subscription? I'd be sitting a lot more in the shop than I normally would; which would mean more regular income for the owner, but less space for random people in a strange town who want to have a nice place to sit for an hour.
$4 for a one-off, no commitment, pay-as-you-go service with instant gratification (buy the coffee, take a seat) seems like a pretty nice deal to me; and it makes cities nicer places to be than if you had to have a subscription.
Too much subscriptions is death by a thousand cuts.
It's worth pondering why SaaS founders are so inclined toward underpricing. I think this is because SaaS founders, especially if they are developers, tend to be really frugal in their SaaS and PaaS spending. For example, they'll use things like their DigitalOcean Droplet cost or their GitHub Pro subscription as a point of comparison. They'll think, "Those services are so valuable, and so cheap, so why would anyone buy my thing for more? I certainly wouldn't."
But what they tend to forget or ignore is that, especially in B2B, it's not your buyer's wallet or money at stake. It's your buyer's (or your buyer's department's) allocated budget. And budget allocations for businesses in mid-market and enterprise are always measured in thousands of dollars, and sometimes in millions.
All they care about is spending the money wisely -- that is, appropriately trading money for revenue, for cost reduction, for time savings, for company cultural impact, or, ideally, for all of the above. At that point, pricing too low can be counterproductive: many enterprises will, consciously or subconsciously, worry that your pricing being that low means you are a counterparty risk and thus not even worth hiring as a vendor.
In the B2C space or in the "B2B tools for individual employees" space, to understand your pricing power requires understanding your buyer demographics. If you are selling productivity software to executives, they will think in terms cost relative to their time and the time of their assistants and subordinates. If you are selling hosting software to entrepreneurs, they will want low starting pricing but be OK with pricing that scales quickly with growth. If you are selling a video streaming or premium content service to consumers, they will anchor you against Netflix, Disney+, Hulu, and cable. Selecting your price is a very important part of your strategy and how your service is perceived. Picking the lowest price you can afford at reasonable margins, which is a kind of obvious default, is often a terrible strategy.