bake - April 2012 - 31

tiered pricing
Follow this model to address the differing needs of bakery shoppers.
BY JOHN UNREIN One size does not fit all, so why should one price? When determining pricing strategies, don’t forget to accommodate for the needs of different types of shoppers. Some customers are willing to pay more for all of the extras, and others seek out the best bargains. Tiered pricing is a mechanism that allows any retailer to set levels of prices based on different categories — or lifestyles — of shoppers. Start by setting one price for the top end of a bakery category (like donuts or cookies), a slightly lower price for the middle and the lowest price for the bargain hunters. 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 you reach those looking exclusively for the best deal. Frost Doughnuts in Mill Creek, WA, offers a prime example. This 3-year-old gourmet donut shop features three tiers of pricing: “Evolved” varieties for $1.89 Don’t underestimate the importance of add-ons. People love to make their own choices, and premium nut toppings or flavor shots for beverages can be priced separately. This strategy lets you charge more for the extras and enhances your bakery’s profitability. Tiered pricing also works particularly well for beverages. Busken Bakery in Cincinnati, OH, uses tiered pricing for its signature lines of Hotties (coffee) and Coolies (smoothies). Hotties, available in five flavors, sell for $2.49 for medium and $3.20 for large. Coolies, available in four flavors, sell for $1.99 for junior, $2.99 for medium and $3.75 for large. apiece, “Premium” varieties for $1.49 and “Classics” for 99¢. Dozens of donut varieties fit into one of three categories. At Frost, for example, a Black Forest Fritter qualifies as Evolved; Blueberry Bismarck is part of the Premium line; Glazed Chocolate Cake is one of the Classics.
Above: Frost Doughnuts in MIll Creek, WA, uses tiered pricing to place their products into one of three categories, which meets the needs of a variety of customers.

bakemag.com | APR 2012 > 31


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bake - April 2012

Table of Contents for the Digital Edition of bake - April 2012

bake - April 2012
Editorial - The pricing issue: Lessons from the City
Table of Contents
News Bites - Sprinkles Banks on Cupcake ATM
News Bites - Guild Offers Baking Series
News Bites - ADM Milling Names President
News Bites - Bruegger’s Lands in Pittsburgh
News Bites - DuPont Addresses Guar Shortage
News Bites - AIB Appoints Latin America Director
News Bites - Puratos Unveils New Website
Management - Employment Policies
Tax Tips - SIMPLE Retirement Planning
Labor Front - Staffing Shifts
Legislation - Compliance Advantages
Ingredients - Versatility of Honey
Price Puzzle
Maximum Management
Tiered Pricing
Choosing a Signature Item
Fabulous Flatbreads
Chain News
World-Class Distinction
Extreme Retail Cakes
Cost-Effective Production
Cafe - The French Connection
Products
Showcase
Classifieds
bake - April 2012 - bake - April 2012
bake - April 2012 - 2
bake - April 2012 - Editorial - The pricing issue: Lessons from the City
bake - April 2012 - 4
bake - April 2012 - Table of Contents
bake - April 2012 - News Bites - Bruegger’s Lands in Pittsburgh
bake - April 2012 - 7
bake - April 2012 - News Bites - Puratos Unveils New Website
bake - April 2012 - 9
bake - April 2012 - Management - Employment Policies
bake - April 2012 - 11
bake - April 2012 - Tax Tips - SIMPLE Retirement Planning
bake - April 2012 - Labor Front - Staffing Shifts
bake - April 2012 - 14
bake - April 2012 - 15
bake - April 2012 - Legislation - Compliance Advantages
bake - April 2012 - 17
bake - April 2012 - Ingredients - Versatility of Honey
bake - April 2012 - 19
bake - April 2012 - Price Puzzle
bake - April 2012 - 21
bake - April 2012 - 22
bake - April 2012 - 23
bake - April 2012 - 24
bake - April 2012 - 25
bake - April 2012 - 26
bake - April 2012 - Maximum Management
bake - April 2012 - 28
bake - April 2012 - 29
bake - April 2012 - 30
bake - April 2012 - Tiered Pricing
bake - April 2012 - 32
bake - April 2012 - 33
bake - April 2012 - Choosing a Signature Item
bake - April 2012 - 35
bake - April 2012 - 36
bake - April 2012 - 37
bake - April 2012 - Fabulous Flatbreads
bake - April 2012 - 39
bake - April 2012 - 40
bake - April 2012 - 41
bake - April 2012 - Chain News
bake - April 2012 - 43
bake - April 2012 - 44
bake - April 2012 - 45
bake - April 2012 - World-Class Distinction
bake - April 2012 - 47
bake - April 2012 - 48
bake - April 2012 - 49
bake - April 2012 - Extreme Retail Cakes
bake - April 2012 - 51
bake - April 2012 - 52
bake - April 2012 - 53
bake - April 2012 - Cost-Effective Production
bake - April 2012 - 55
bake - April 2012 - 56
bake - April 2012 - 57
bake - April 2012 - Cafe - The French Connection
bake - April 2012 - 59
bake - April 2012 - 60
bake - April 2012 - 61
bake - April 2012 - Products
bake - April 2012 - 63
bake - April 2012 - Showcase
bake - April 2012 - 65
bake - April 2012 - Classifieds
bake - April 2012 - 67
bake - April 2012 - 68
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