Price endings, bundles and sizes for small food brands

Price endings, bundles and sizes are ways to present a price you have already worked out. They do not replace the working. Pick endings that make paying easy in your channel, build sizes where the price per gram falls while your profit per sale rises, and only offer bundles if the numbers still work when someone who would have bought several units anyway takes the deal. No tricks: customers come back when they trust your prices.

Before deciding how a price looks, you need the price itself. That is what the guide on how to price a food product is for. What follows is the next step.

Price endings: round or .99

Supermarkets love prices ending in .99 or .95. At a market stall or in a small shop, practicality wins:

• If many customers pay cash, round prices or prices ending in .50 save you hunting for change. Charging $3.49 to someone with a five means keeping a tray of pennies all day.
• If most customers pay by card, any amount works, and the ending is only about how the number reads.
• On a menu or price list, keep one style throughout. Mixing $3.50, $5.99 and $12 looks untidy.

What you can measure is the effect on your takings. If you sell 300 brownies a month, charging $3.95 instead of $3.50 is 0.45 × 300 = $135 more a month. Whether one ending sells better than another for you, you will only find out by testing and writing it down. The big decision is the price level; the ending is a detail.

If you charge sales tax and show prices including it, the ending you choose applies to the final price, and your profit comes from the price before tax. Check your local tax rules for how prices must be displayed.

Sizes: price per unit down, profit per sale up

A good size range does two things at once. The customer sees that the bigger size works out cheaper per piece or per gram, and you make more on each sale because the packaging, the label and your handling time do not grow as fast as the contents.

To build one:

1. Work out the loaded cost of each size separately. A box for nine does not cost nine times a single bag.
2. Price each size and work out its price per piece or per 100 g.
3. Check that the price per piece falls as the size goes up, and that profit per sale rises.

If the big size leaves you less profit per sale than the small one, the range is upside down and every customer who trades up costs you money.

Bundles: when they pay

A bundle (a box of four, three jars for a set price, a meal deal) is a discount with a condition attached. It has two opposite effects:

• It adds when someone who was going to buy one unit takes the bundle instead.
• It costs when someone who was going to buy several anyway takes the bundle and pays less.

Work out both cases and see how many customers of the first kind you need to cover one of the second. The guide on what a discount really costs you explains the logic in more detail.

Worked example: brownies in three sizes

You sell brownies at a weekend market and through local orders. Each brownie costs you $0.95 loaded (chocolate, butter, eggs, sugar, flour, your time, oven energy, waste). The packaging differs by size: a single bag is $0.15, a box of four $0.70, a box of nine $1.00.

The workings:

• Single: cost 0.95 + 0.15 = $1.10; profit 3.50 − 1.10 = $2.40
• Box of 4: cost 0.95 × 4 + 0.70 = $4.50; profit 12.00 − 4.50 = $7.50; per brownie 12.00 ÷ 4 = $3.00
• Box of 9: cost 0.95 × 9 + 1.00 = $9.55; profit 24.00 − 9.55 = $14.45; per brownie 24.00 ÷ 9 = $2.67

The range works: price per brownie falls from $3.50 to $2.67, and profit per sale rises from $2.40 to $14.45.

Does the box of four pay? Four singles would be $14.00 and cost you 1.10 × 4 = $4.40, a profit of $9.60. The box makes $7.50.

• If someone who would have bought one brownie takes the box, profit goes from $2.40 to $7.50: $5.10 more.
• If someone who would have bought four singles takes the box, you make $9.60 − $7.50 = $2.10 less.

One customer trading up from a single covers about two who would have bought four anyway (5.10 ÷ 2.10 = 2.4).

And the box of nine? Nine singles would make 31.50 − 9.90 = $21.60, against $14.45 for the box: $7.15 less. Trading up from a single adds 14.45 − 2.40 = $12.05. One trade-up covers fewer than two "would have bought nine anyway" customers (12.05 ÷ 7.15 = 1.7). Still positive, but with a thinner cushion. If you find the nine-box mostly goes to office orders that used to buy singles, its price is too low.

What not to do

• Made-up "was" prices. Striking through a price you never charged so the current one looks like a deal. Your regulars know.
• Shrinking without saying. If the brownie goes from 80 g to 70 g, say so and change the label. If what you need is a higher price, the guide on how to raise prices without losing customers shows the way.
• Too many options. Four sizes and three bundles confuse people at the stall and complicate your packaging orders.
• "DM for price." Hiding the price on social media makes people message you to find out, and anyone who does not want to message simply leaves. Post it.
• Bundles that leave you nothing. Before launching a deal, check the contribution margin of every product in it.

Do it with the calculator

Set up each size as its own product in the food cost calculator, with its own packaging; you will see the loaded cost of each and can build your size and bundle table with real numbers.