Questions

How do you determine a good, profitable yet sensible, price for a service that you offer?

With the terrible weather that has hit my area, an increasing number of people have expressed an interest in a grocery delivery service. There is currently no provider for such a service in my area. After doing a little bit of research online, I've found that a number of people have tried (and failed) at executing the idea, as there are a number of issues with such a service (such as scalability). I'm going to give it a try, but am confused on where to start with a pricing model.

5answers

Consider looking at how a pizza delivery service works. If they order the product online some automatically charge a service fee to initiate the service. You could charge a fee based on mileage from the store or a flat fee/percentage. Make it tip based as well for the driver. Of course you have to pay them a wage (the driver) put they will be taking tips which could help you even more considering they will typically show more customer service skills if they understand their income is based on tips. You may not actually make any money on the delivery. It could actually be a break even venture just to fill the gap in an area that one one else is doing. The approach is to get the word out that you do it and it's a form of advertising for your store. I have several businesses within my business. Two or three or not profitable at all. But these two or three businesses drive triple the income to other services where I do make a large profit. Ultimately I'd suggest sitting down with employees and doing a mastermind meeting. Offer say $100 To $250 bonus to the best idea. I will say it again. It's not always about making a profit on every thing you do. People offer services and products for sale to get them into the business. Eliminate as many expenses as you can by having drivers provide their own car and get some of those delivery signs they can put on their car like pizza places do. Again, it's a great way to advertise and fill at need at the same time.

One last thing. There is a company called Campisi's Pizza in the Dallas, Texas area. Their website is a perfect example of a delivery website, service fee and figuring a tip and paying that tip on the initial order.

Good luck and much success. b


Answered 5 years ago

Good is anything that help you earn your bread and butter (B&B). Better is anything that helps you earn a coffee along with the B&B. Best is anything that could make others crave for the same. On that note, profit is a relative term. Work out your cost/expenses and mark up with the percentage profit that you would like to make. Sensible would be something that would make the perceived value of your service much more than the cost involved in availing the same.

Looking for anything specific? Feel free to reach out.


Answered 5 years ago

I am not an expert on pricing, but I often follow http://www.priceintelligently.com/ when required. Some really useful insights there. You can also check http://cdn2.hubspot.net/hub/120299/file-2530981791-pdf/PricingPitfalls.pdf.


Answered 5 years ago

In short, lean test. Try and test messages to market however you can to explore the range; or start high and offer discounts of varying amounts while driving traffic to your homepage to convert and test the pricing points. You can also use focus groups, but for pricing I've found they are often unreliable.


Answered 5 years ago

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