Saturday, April 24, 2010

Price-Point

We'll start with one size -- 24 oz -- and aim to price all smoothies at $4.09, $4.50 with tax.  This keeps operations simple and reduces labor costs.  Fewer coins to deal with means the customer-line moves faster, as we don't have to worry about not having enough pennies, nickels, and dimes, and it'll encourage us to develop drinks that offer the most nutritional value per dollar.  We'll offer different sized drinks if we think it'll increase demand enough to justify the additional labor costs to do so.  

(We've yet to decide on the price of a scoop of Matrix whey protein).

We'll be sure to keep our prices lower than those of our main competitors, Emerald City Smoothie and Jamba Juice.  To maintain our prices, we have to develop a work-flow process that reduces our labor costs and wastage.  We want to keep prices low by figuring out more efficient methods to produce our products, and not by reducing quality. 


To maximize sales without sacrificing profit, we want to keep prices at a point where enough people think it's more cost-effective to get their servings of fruit/vegetables from us than on their own.  One can make one of our smoothies for $2, assuming they shop at places like QFC or Safeway, have a $500 dollar blender, and are willing to learn how to make one.  So we have to figure out the convenience cost to customers.  That is, how much is the average health conscious customer willing to pay to let someone else produce what they need/want?  We need to keep the cost at a point where enough customers will think that it's better to purchase their smoothies from us than to deal with the hassle and risk involved in purchasing and preparing produce (cleaning, cutting, waste) to make a nutritionally comparable smoothie made by Fresh Fruit Smoothies.   

Our prices are determined not just by the quality of our smoothies, but also by how well we can control the cost to make them.

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