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Pricing for Chocolates

Confections Chocolate

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58 replies to this topic

#31 cotovelo

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Posted 27 May 2006 - 07:51 AM

I thought I would put in my 2 cents here because I have made many mistakes while starting my company.
One mistake   I  made was looking at the chocolatiers that have products at this level and trying to mimic their prices, or at least get close.  But not all cirumstances are the same, (.e location, market, etc...).  I just got back from New York and couldn't believe that I was paying $2.25 to $2.50 for a single piece of chocolate, granted some of them were good.   But you have to think about what kind of rent they pay, how much their labor is and just doing business in  market like that.  It makes me love Kansas city because cost of living is very reasonable.
I couldn't get away with charging that much here, even if I felt my products was just as good.  I still think that we are one of the better values among this market.  I have wholsale customers who sell my chocolates for much more than I do!

Here is the catch though, people look at price and make a judgement before they even consume the product, "If something is more expensive, then it must be better".  The psychology behind marketing and pricing can be very tricky.  Hopefully after time the consumer will become more educated and be able to filter through all the marketing and packaging and judge what is inside.


I sell mine by the piece instead of by weight.  We have some pieces that are smaller but they take just as much time to produce as the larger pieces, and labor is the most expensive part of a piece of chocolate no matter where it is produced.
It is true also that raising your price is difficult after you get started, I went through that so give this a lot of though before you set your price point.  Do a thorough cost analysis, taking into account every expense.  Like was said before, this is not a charity, you do need to make a living.

Sorry for the rambling email but this is a very challenging aspect of the business and hope I have helped a little.

Christopher

View Post



hi christopher,
do you charge one price regardless of piece, or does each piece cost a different amount?
how did you go about doing an analysis? did you hire someone or did it on your own?

I've heard good things about your chocolate. I will be making a trip on sunday to cocoa bella in san francisco, which i understand sells some of your chocolates. Any recommondations on your favorite ones?

View Post


I do charge one price regardless of piece. I did a cost analysis on about 10 of my pieces so I could get a good idea on a range. All of my pieces are relatively close in size but there are a few that are a bit smaller. I figured out the cost of the ingredients but also figured out labor as well. I did this by getting a timer and timing all of the steps that went into production. It is a pain, but I did it for all of the different types (caramels, molded, enrobed, multi layer, marzipans etc...).
I added a fixed percentage for utilities, rent, and General Expenses (office supplies, postage). Then I was able to get a fairly accurate per piece price.
Once you have this formula, you can change it, for example I am building a new shop and my rent is going to basically triple so I can plug that into the equation. Or if you hire someone at $9.00 and hour instead of $10.00 an hour you can change that as well.
I am going to be at CocoaBella next week doing a sampling of some things ( I am not sure what day it is scheduled for yet, probably Friday or Saturday the 2nd or 3rd. You could find out from CocaoBella for sure.

Hope this helps,

Christopher

#32 sote23

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Posted 27 May 2006 - 01:10 PM

I thought I would put in my 2 cents here because I have made many mistakes while starting my company.
One mistake  I  made was looking at the chocolatiers that have products at this level and trying to mimic their prices, or at least get close.  But not all cirumstances are the same, (.e location, market, etc...).  I just got back from New York and couldn't believe that I was paying $2.25 to $2.50 for a single piece of chocolate, granted some of them were good.  But you have to think about what kind of rent they pay, how much their labor is and just doing business in  market like that.  It makes me love Kansas city because cost of living is very reasonable.
I couldn't get away with charging that much here, even if I felt my products was just as good.  I still think that we are one of the better values among this market.  I have wholsale customers who sell my chocolates for much more than I do!

Here is the catch though, people look at price and make a judgement before they even consume the product, "If something is more expensive, then it must be better".  The psychology behind marketing and pricing can be very tricky.  Hopefully after time the consumer will become more educated and be able to filter through all the marketing and packaging and judge what is inside.


I sell mine by the piece instead of by weight.  We have some pieces that are smaller but they take just as much time to produce as the larger pieces, and labor is the most expensive part of a piece of chocolate no matter where it is produced.
It is true also that raising your price is difficult after you get started, I went through that so give this a lot of though before you set your price point.  Do a thorough cost analysis, taking into account every expense.  Like was said before, this is not a charity, you do need to make a living.

Sorry for the rambling email but this is a very challenging aspect of the business and hope I have helped a little.

Christopher

View Post



hi christopher,
do you charge one price regardless of piece, or does each piece cost a different amount?
how did you go about doing an analysis? did you hire someone or did it on your own?

I've heard good things about your chocolate. I will be making a trip on sunday to cocoa bella in san francisco, which i understand sells some of your chocolates. Any recommondations on your favorite ones?

View Post


I do charge one price regardless of piece. I did a cost analysis on about 10 of my pieces so I could get a good idea on a range. All of my pieces are relatively close in size but there are a few that are a bit smaller. I figured out the cost of the ingredients but also figured out labor as well. I did this by getting a timer and timing all of the steps that went into production. It is a pain, but I did it for all of the different types (caramels, molded, enrobed, multi layer, marzipans etc...).
I added a fixed percentage for utilities, rent, and General Expenses (office supplies, postage). Then I was able to get a fairly accurate per piece price.
Once you have this formula, you can change it, for example I am building a new shop and my rent is going to basically triple so I can plug that into the equation. Or if you hire someone at $9.00 and hour instead of $10.00 an hour you can change that as well.
I am going to be at CocoaBella next week doing a sampling of some things ( I am not sure what day it is scheduled for yet, probably Friday or Saturday the 2nd or 3rd. You could find out from CocaoBella for sure.

Hope this helps,

Christopher

View Post



christopher,
yes, that is very helpful. i appreciate you taking the time to answer my questions. i will contact cocoabella and see what date it is. i will see if i can make it. by the way, you have a very well done website. i'm just in shock how many really bad websites there are out there.

Luis

#33 sote23

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Posted 27 May 2006 - 02:16 PM

I thought I would put in my 2 cents here because I have made many mistakes while starting my company.
One mistake  I  made was looking at the chocolatiers that have products at this level and trying to mimic their prices, or at least get close.  But not all cirumstances are the same, (.e location, market, etc...).  I just got back from New York and couldn't believe that I was paying $2.25 to $2.50 for a single piece of chocolate, granted some of them were good.  But you have to think about what kind of rent they pay, how much their labor is and just doing business in  market like that.  It makes me love Kansas city because cost of living is very reasonable.
I couldn't get away with charging that much here, even if I felt my products was just as good.  I still think that we are one of the better values among this market.  I have wholsale customers who sell my chocolates for much more than I do!

Here is the catch though, people look at price and make a judgement before they even consume the product, "If something is more expensive, then it must be better".  The psychology behind marketing and pricing can be very tricky.  Hopefully after time the consumer will become more educated and be able to filter through all the marketing and packaging and judge what is inside.


I sell mine by the piece instead of by weight.  We have some pieces that are smaller but they take just as much time to produce as the larger pieces, and labor is the most expensive part of a piece of chocolate no matter where it is produced.
It is true also that raising your price is difficult after you get started, I went through that so give this a lot of though before you set your price point.  Do a thorough cost analysis, taking into account every expense.  Like was said before, this is not a charity, you do need to make a living.

Sorry for the rambling email but this is a very challenging aspect of the business and hope I have helped a little.

Christopher

View Post



hi christopher,
do you charge one price regardless of piece, or does each piece cost a different amount?
how did you go about doing an analysis? did you hire someone or did it on your own?

I've heard good things about your chocolate. I will be making a trip on sunday to cocoa bella in san francisco, which i understand sells some of your chocolates. Any recommondations on your favorite ones?

View Post


I do charge one price regardless of piece. I did a cost analysis on about 10 of my pieces so I could get a good idea on a range. All of my pieces are relatively close in size but there are a few that are a bit smaller. I figured out the cost of the ingredients but also figured out labor as well. I did this by getting a timer and timing all of the steps that went into production. It is a pain, but I did it for all of the different types (caramels, molded, enrobed, multi layer, marzipans etc...).
I added a fixed percentage for utilities, rent, and General Expenses (office supplies, postage). Then I was able to get a fairly accurate per piece price.
Once you have this formula, you can change it, for example I am building a new shop and my rent is going to basically triple so I can plug that into the equation. Or if you hire someone at $9.00 and hour instead of $10.00 an hour you can change that as well.
I am going to be at CocoaBella next week doing a sampling of some things ( I am not sure what day it is scheduled for yet, probably Friday or Saturday the 2nd or 3rd. You could find out from CocaoBella for sure.

Hope this helps,

Christopher

View Post


christopher,
I checked with cocoabella and they said you are scheduled for friday 6-8pm.

#34 cotovelo

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Posted 28 May 2006 - 09:36 AM

I thought I would put in my 2 cents here because I have made many mistakes while starting my company.
One mistake   I  made was looking at the chocolatiers that have products at this level and trying to mimic their prices, or at least get close.  But not all cirumstances are the same, (.e location, market, etc...).  I just got back from New York and couldn't believe that I was paying $2.25 to $2.50 for a single piece of chocolate, granted some of them were good.   But you have to think about what kind of rent they pay, how much their labor is and just doing business in  market like that.  It makes me love Kansas city because cost of living is very reasonable.
I couldn't get away with charging that much here, even if I felt my products was just as good.  I still think that we are one of the better values among this market.  I have wholsale customers who sell my chocolates for much more than I do!

Here is the catch though, people look at price and make a judgement before they even consume the product, "If something is more expensive, then it must be better".  The psychology behind marketing and pricing can be very tricky.  Hopefully after time the consumer will become more educated and be able to filter through all the marketing and packaging and judge what is inside.


I sell mine by the piece instead of by weight.  We have some pieces that are smaller but they take just as much time to produce as the larger pieces, and labor is the most expensive part of a piece of chocolate no matter where it is produced.
It is true also that raising your price is difficult after you get started, I went through that so give this a lot of though before you set your price point.  Do a thorough cost analysis, taking into account every expense.  Like was said before, this is not a charity, you do need to make a living.

Sorry for the rambling email but this is a very challenging aspect of the business and hope I have helped a little.

Christopher

View Post



hi christopher,
do you charge one price regardless of piece, or does each piece cost a different amount?
how did you go about doing an analysis? did you hire someone or did it on your own?

I've heard good things about your chocolate. I will be making a trip on sunday to cocoa bella in san francisco, which i understand sells some of your chocolates. Any recommondations on your favorite ones?

View Post


I do charge one price regardless of piece. I did a cost analysis on about 10 of my pieces so I could get a good idea on a range. All of my pieces are relatively close in size but there are a few that are a bit smaller. I figured out the cost of the ingredients but also figured out labor as well. I did this by getting a timer and timing all of the steps that went into production. It is a pain, but I did it for all of the different types (caramels, molded, enrobed, multi layer, marzipans etc...).
I added a fixed percentage for utilities, rent, and General Expenses (office supplies, postage). Then I was able to get a fairly accurate per piece price.
Once you have this formula, you can change it, for example I am building a new shop and my rent is going to basically triple so I can plug that into the equation. Or if you hire someone at $9.00 and hour instead of $10.00 an hour you can change that as well.
I am going to be at CocoaBella next week doing a sampling of some things ( I am not sure what day it is scheduled for yet, probably Friday or Saturday the 2nd or 3rd. You could find out from CocaoBella for sure.

Hope this helps,

Christopher

View Post


christopher,
I checked with cocoabella and they said you are scheduled for friday 6-8pm.

View Post


Would love to meet any fellow eGullet members if you are in the area at that time!

#35 sote23

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Posted 31 May 2006 - 02:18 PM

I thought I would put in my 2 cents here because I have made many mistakes while starting my company.
One mistake  I  made was looking at the chocolatiers that have products at this level and trying to mimic their prices, or at least get close.  But not all cirumstances are the same, (.e location, market, etc...).  I just got back from New York and couldn't believe that I was paying $2.25 to $2.50 for a single piece of chocolate, granted some of them were good.  But you have to think about what kind of rent they pay, how much their labor is and just doing business in  market like that.  It makes me love Kansas city because cost of living is very reasonable.
I couldn't get away with charging that much here, even if I felt my products was just as good.  I still think that we are one of the better values among this market.  I have wholsale customers who sell my chocolates for much more than I do!

Here is the catch though, people look at price and make a judgement before they even consume the product, "If something is more expensive, then it must be better".  The psychology behind marketing and pricing can be very tricky.  Hopefully after time the consumer will become more educated and be able to filter through all the marketing and packaging and judge what is inside.


I sell mine by the piece instead of by weight.  We have some pieces that are smaller but they take just as much time to produce as the larger pieces, and labor is the most expensive part of a piece of chocolate no matter where it is produced.
It is true also that raising your price is difficult after you get started, I went through that so give this a lot of though before you set your price point.  Do a thorough cost analysis, taking into account every expense.  Like was said before, this is not a charity, you do need to make a living.

Sorry for the rambling email but this is a very challenging aspect of the business and hope I have helped a little.

Christopher

View Post



hi christopher,
do you charge one price regardless of piece, or does each piece cost a different amount?
how did you go about doing an analysis? did you hire someone or did it on your own?

I've heard good things about your chocolate. I will be making a trip on sunday to cocoa bella in san francisco, which i understand sells some of your chocolates. Any recommondations on your favorite ones?

View Post


I do charge one price regardless of piece. I did a cost analysis on about 10 of my pieces so I could get a good idea on a range. All of my pieces are relatively close in size but there are a few that are a bit smaller. I figured out the cost of the ingredients but also figured out labor as well. I did this by getting a timer and timing all of the steps that went into production. It is a pain, but I did it for all of the different types (caramels, molded, enrobed, multi layer, marzipans etc...).
I added a fixed percentage for utilities, rent, and General Expenses (office supplies, postage). Then I was able to get a fairly accurate per piece price.
Once you have this formula, you can change it, for example I am building a new shop and my rent is going to basically triple so I can plug that into the equation. Or if you hire someone at $9.00 and hour instead of $10.00 an hour you can change that as well.
I am going to be at CocoaBella next week doing a sampling of some things ( I am not sure what day it is scheduled for yet, probably Friday or Saturday the 2nd or 3rd. You could find out from CocaoBella for sure.

Hope this helps,

Christopher

View Post


christopher,
I checked with cocoabella and they said you are scheduled for friday 6-8pm.

View Post


Would love to meet any fellow eGullet members if you are in the area at that time!

View Post



christopher,
not sure of my schedule, but I'm going to try to make it .

#36 Truffle Guy

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Posted 31 May 2006 - 04:50 PM

One thing I haven't seen mentioned (I may have missed it) is the cost of the ingredients. Are you using Valrhona or a cheaper couverture? I believe in Chris' case he uses top of the line ingredients. If you are paying more for a premium butter or cream it impacts cost. Also...if you are selling to consumers in Palm Beach they will pay more than say Mobile Alabama (no slam intended). Also, is waste factored in to your calculation?

Using others as a gauge can be a real mistake as who is to say they are priced correctly (or even profitable). I manage a business which does in excess of 65 million in business. We don't make decisions based on our competitors prices but rather the service we can provide based on our costs.

I think Chris makes a good point about the price's in NY compared to KC. Just because they charge more doesn't mean the product is worth the price, it may be what it costs to sell it in that market.

In the end it really isn't what you charge for the piece, it's whether you are making money. That calculation is different for everyone based on their location/labor costs. There is a great book called "Trading Up" that talks about the high end consumer and would be good for anyone in the industry. People will pay more for an emotional purchase, take that into consideration but the quality of your product eventually will determine if you are perceived as high end...not the price.




I thought I would put in my 2 cents here because I have made many mistakes while starting my company.
One mistake   I  made was looking at the chocolatiers that have products at this level and trying to mimic their prices, or at least get close.  But not all cirumstances are the same, (.e location, market, etc...).  I just got back from New York and couldn't believe that I was paying $2.25 to $2.50 for a single piece of chocolate, granted some of them were good.   But you have to think about what kind of rent they pay, how much their labor is and just doing business in  market like that.  It makes me love Kansas city because cost of living is very reasonable.
I couldn't get away with charging that much here, even if I felt my products was just as good.  I still think that we are one of the better values among this market.  I have wholsale customers who sell my chocolates for much more than I do!

Here is the catch though, people look at price and make a judgement before they even consume the product, "If something is more expensive, then it must be better".  The psychology behind marketing and pricing can be very tricky.  Hopefully after time the consumer will become more educated and be able to filter through all the marketing and packaging and judge what is inside.


I sell mine by the piece instead of by weight.  We have some pieces that are smaller but they take just as much time to produce as the larger pieces, and labor is the most expensive part of a piece of chocolate no matter where it is produced.
It is true also that raising your price is difficult after you get started, I went through that so give this a lot of though before you set your price point.  Do a thorough cost analysis, taking into account every expense.  Like was said before, this is not a charity, you do need to make a living.

Sorry for the rambling email but this is a very challenging aspect of the business and hope I have helped a little.

Christopher

View Post



hi christopher,
do you charge one price regardless of piece, or does each piece cost a different amount?
how did you go about doing an analysis? did you hire someone or did it on your own?

I've heard good things about your chocolate. I will be making a trip on sunday to cocoa bella in san francisco, which i understand sells some of your chocolates. Any recommondations on your favorite ones?

View Post


I do charge one price regardless of piece. I did a cost analysis on about 10 of my pieces so I could get a good idea on a range. All of my pieces are relatively close in size but there are a few that are a bit smaller. I figured out the cost of the ingredients but also figured out labor as well. I did this by getting a timer and timing all of the steps that went into production. It is a pain, but I did it for all of the different types (caramels, molded, enrobed, multi layer, marzipans etc...).
I added a fixed percentage for utilities, rent, and General Expenses (office supplies, postage). Then I was able to get a fairly accurate per piece price.
Once you have this formula, you can change it, for example I am building a new shop and my rent is going to basically triple so I can plug that into the equation. Or if you hire someone at $9.00 and hour instead of $10.00 an hour you can change that as well.
I am going to be at CocoaBella next week doing a sampling of some things ( I am not sure what day it is scheduled for yet, probably Friday or Saturday the 2nd or 3rd. You could find out from CocaoBella for sure.

Hope this helps,

Christopher

View Post



#37 Desiderio

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Posted 31 May 2006 - 05:27 PM

Thank you .
I will looking into the book you are suggestion,I am trying really hard to get as much informations as I can , and I remeber in another post when you were talking about testing your market ,I will keep doing that on a larger scale if I can , before I made any decision , get to the point where I am sure I have a real market and I can actually have a business going .I do use high end ingredients , for me making a chocolate is all about giving my best using an ingredient that will make the difference ,its the only way I am going to make them and if I cant then it means I will keep making them for friends and family.

Thank you for your advices.
Vanessa

#38 sote23

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Posted 01 June 2006 - 02:21 PM

I totally agree. ingrediants make a huge difference. i've come across alot of companies that give the impression of being high end and aren't even using high end chocolate.




One thing I haven't seen mentioned (I may have missed it) is the cost of the ingredients.  Are you using Valrhona or a cheaper couverture?  I believe in Chris' case he uses top of the line ingredients.  If you are paying more for a premium butter or cream it impacts cost.  Also...if you are selling to consumers in Palm Beach they will pay more than say Mobile Alabama (no slam intended).  Also, is waste factored in to your calculation? 

    Using others as a gauge can be a real mistake as who is to say they are priced correctly (or even profitable).  I manage a business which does in excess of 65 million in business.  We don't make decisions based on our competitors prices but rather the service we can provide based on our costs. 

    I think Chris makes a good point about the price's in NY compared to KC.  Just because they charge more doesn't mean the product is worth the price, it may be what it costs to sell it in that market. 

      In the end it really isn't what you charge for the piece, it's whether you are making money.  That calculation is different for everyone based on their location/labor costs.  There is a great book called "Trading Up" that talks about the high end consumer and would be good for anyone in the industry.  People will pay more for an emotional purchase, take that into consideration but the quality of your product eventually will determine if you are perceived as high end...not the price.


   



I thought I would put in my 2 cents here because I have made many mistakes while starting my company.
One mistake  I  made was looking at the chocolatiers that have products at this level and trying to mimic their prices, or at least get close.  But not all cirumstances are the same, (.e location, market, etc...).  I just got back from New York and couldn't believe that I was paying $2.25 to $2.50 for a single piece of chocolate, granted some of them were good.  But you have to think about what kind of rent they pay, how much their labor is and just doing business in  market like that.  It makes me love Kansas city because cost of living is very reasonable.
I couldn't get away with charging that much here, even if I felt my products was just as good.  I still think that we are one of the better values among this market.  I have wholsale customers who sell my chocolates for much more than I do!

Here is the catch though, people look at price and make a judgement before they even consume the product, "If something is more expensive, then it must be better".  The psychology behind marketing and pricing can be very tricky.  Hopefully after time the consumer will become more educated and be able to filter through all the marketing and packaging and judge what is inside.


I sell mine by the piece instead of by weight.  We have some pieces that are smaller but they take just as much time to produce as the larger pieces, and labor is the most expensive part of a piece of chocolate no matter where it is produced.
It is true also that raising your price is difficult after you get started, I went through that so give this a lot of though before you set your price point.  Do a thorough cost analysis, taking into account every expense.  Like was said before, this is not a charity, you do need to make a living.

Sorry for the rambling email but this is a very challenging aspect of the business and hope I have helped a little.

Christopher

View Post



hi christopher,
do you charge one price regardless of piece, or does each piece cost a different amount?
how did you go about doing an analysis? did you hire someone or did it on your own?

I've heard good things about your chocolate. I will be making a trip on sunday to cocoa bella in san francisco, which i understand sells some of your chocolates. Any recommondations on your favorite ones?

View Post


I do charge one price regardless of piece. I did a cost analysis on about 10 of my pieces so I could get a good idea on a range. All of my pieces are relatively close in size but there are a few that are a bit smaller. I figured out the cost of the ingredients but also figured out labor as well. I did this by getting a timer and timing all of the steps that went into production. It is a pain, but I did it for all of the different types (caramels, molded, enrobed, multi layer, marzipans etc...).
I added a fixed percentage for utilities, rent, and General Expenses (office supplies, postage). Then I was able to get a fairly accurate per piece price.
Once you have this formula, you can change it, for example I am building a new shop and my rent is going to basically triple so I can plug that into the equation. Or if you hire someone at $9.00 and hour instead of $10.00 an hour you can change that as well.
I am going to be at CocoaBella next week doing a sampling of some things ( I am not sure what day it is scheduled for yet, probably Friday or Saturday the 2nd or 3rd. You could find out from CocaoBella for sure.

Hope this helps,

Christopher

View Post

View Post


Edited by sote23, 01 June 2006 - 02:23 PM.


#39 lebowits

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Posted 21 September 2009 - 06:11 AM

I'd like to revive this topic but with a bit of a twist. I have recently gotten my own business under way and intend to develop more of a "wholesale" market as opposed to retail. My targets are going to be local restaurants, party planners, etc.

In the mean time, there is a local farmers market that I am using to establish myself in the community and start to build some relationships. I've read this thread regarding pricing of my pieces and have worked out an average food cost and total production cost (including labor)which I am marking up what I hope is an appropriate amount.

My real question is this. I don't have issues with providing samples to potential customer (e.g. restaurants et. al.) but doing so at the farmers market for free would quickly see all of my stock consumed. People will pick up anything that is "free". So what I've done is to offer single pieces at a lower price that what the same number of pieces would be in any of my boxes. This presents a problem.

I have priced my boxes (4, 8, and 15 pieces) in such a way that the price per piece declines as you buy larger boxes. If I continue this price curve to single pieces, I very firmly believe that I would exceed the price people are willing to pay for a single item, no matter how beautiful and tasty it might be. I have priced my single pieces (sold as "samples") at the same as all of my other boxes but without including the cost of packaging since there is none and include local sales tax.

I've had very positive reactions to my chocolates from everyone who has tried them and am starting to get repeat customers. People are also coming by to tell me how much they or their friends for whom they bought them enjoyed them. There are always a few people who come by and look at my prices and comment how they can buy 4 single pieces for 1/3 less than the cost of a 4-piece box. I am proactive in telling them that the "sample" price is to encourage them to try my pieces and that it doesn't "cover" packaging and some other overhead costs which they seem to accept readily enough.

So with all of this lengthy introduction, what do you do about samples in a retail environment where you have constant foot traffic while you're open? Do you have any additional advice as to how to position "samples" (whether customers pay for them or not) in your pricing structure?
Steve Lebowitz
Doer of All Things
Steven Howard Confections

Slicing a warm slab of bacon is a lot like giving a ferret a shave. No matter how careful you are, somebody's going to get hurt - Alton Brown, "Good Eats"

#40 prasantrin

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Posted 21 September 2009 - 06:34 AM

Not what you're asking, but I would limit the number of sample pieces you sell at a lower price. For example, they can have two pieces at the lower price, but anything beyond that should be at a price higher than the per-piece price in a 4-piece box.

Or limit the sample price to new customers only, or customers with a special ticket or card.

#41 pattyc

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Posted 21 September 2009 - 04:06 PM

We give away a lot of samples at events and cut them into quarters or sixths, so it's just a taste and not an entire bite. We don't charge for samples and see it as a way to promote our chocolate by using our seconds, which inevitably leads people into buying them.

#42 Beth Wilson

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Posted 21 September 2009 - 06:02 PM

For sampling we cut up our chocolates into pieces too. I also got a very sample size small round mould that I sometimes just offer samples of the milk, dark or white to curious customers.

The most popular sampling we do is usually cutting stuff we tend to not sell in our boxes like barks. Most people just want to figure out if the product you are selling is of good quality products and if they will like it. Sometimes a taste of one thing will lead to selling of others.

I also found I had the discussion with customers on what is the "better deal" and lets face it, I am not competing with the prices of a drugstore, cornerstore or the big department stores. I explain to the customers that I have to incorporate the cost of packaging into the boxes and offer the best price I can everyday. Most times customers accept my frankness and once in a blue moon someone will look around and end up not getting anything and I am fine with that.

I stand by the quality of my product and have learned that samples become "free lunch" so I offer samples of products that I can easily product larger amounts and leave the truffles and confections that are made in smaller batches for my boxes.

Sampling does sell the products and once you have them trying stuff they come back to try something new next time!

Oh,sometimes if I am experimenting with flavours I will sample with the request for feedback on a product that I am developing. I will put out pieces of the "try" in Milk, Dark and/or white and will chat up the customers for opinions. I have made some great relationships with some customers doing this and it has either pushed a product into production or re-inforced the "needs more work" idea.

#43 prairiegirl

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Posted 21 September 2009 - 08:37 PM

I think that wholesaling is a lot of work with little profit. It helps at the start to get you out there but I tell people "it is twice the work for half the profit"! Retail and corporate are what I prefer to do. I do go thru some restaurants and might chase one or two others because of the prestige and branding. For samples I use a 5 gram cup mold and I put ganache that I no longer need, maybe I made too much... and use that in these cups because most people want the freebees. Or some old bonbons that aren't moving i will cut up and use as samples.

#44 chocoera

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Posted 23 September 2009 - 07:31 PM

first, steve, congratulations!!!

second, i agree with the wholesale thing. i don't really understand it. i'm starting up and yes, i have a customer base, but no, i'm not as wonderfully well-known as our dear christopher (ps: loooooooove your chocolates...and the turtles....yum-o) i'm based in a small town, and pretty much have the market in that i'm a niche store, and there's nothing like us around. but being small and midwestern, there is only so high i can go with prices before i scare people away. so that doesn't leave me much room for wholesale costs. are you supposed to look at it as a way to get your product out? or you just tell yourself you're not going to make a ton of money with it? an upside is that if you're going to shell or dip, its better (to me anyway) to know you're doing upper hundreds of chocolates instead of 100, and KNOW they are going to sell. but i also run into boutiques around here that want 40-75% markup (i thought standard was 20%?) so, anyway, does anyone have advice about pricing out wholesale? do you just take the cut and know it is stability and networking? right now i'm doing a standard 25-35% depending on the product, but have no real rhyme or reason behind it (don't hate me, i know that's not smart, i do know all my costs and most labor is covered though)
steve: are you marking them out based on quantity purchased? x amount = % discount or if you buy more to equal y, you get a bigger discount? are you including packaging or just stock packaging to get a product there? (like if they have a case, and dont use bags or boxes)

uggg. i know i should add more wholesale accounts (i just had a winery approach me) but how do you know how much is a good enough discount to entice them, but still make it worth your while? i hear sooooo many who say wholesale is the way to go, but i just don't understand the logic.

PS- no machinery here....just hand-tempering, slabbing and hand-dipping, hand-painting (gonna buy that badger soon though!) and shelling (done by hand)
PSS- going to be bothering you all again soon, as we have an official new retail location (lease and everything!) and now going through setting up a brand new kitchen, wondering about equipment to buy, how to sell walk-by retail (instead of an order by order basis as we are now) etc....
thanks!

and again...steve...wowzers. very excited for you!
PSSS: i want a mint pattie. now. :P

#45 lebowits

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Posted 24 September 2009 - 06:47 AM

first, steve, congratulations!!!

second, i agree with the wholesale thing. i don't really understand it. i'm starting up and yes, i have a customer base, but no, i'm not as wonderfully well-known as our dear christopher (ps: loooooooove your chocolates...and the turtles....yum-o) i'm based in a small town, and pretty much have the market in that i'm a niche store, and there's nothing like us around. but being small and midwestern, there is only so high i can go with prices before i scare people away. so that doesn't leave me much room for wholesale costs. are you supposed to look at it as a way to get your product out? or you just tell yourself you're not going to make a ton of money with it? an upside is that if you're going to shell or dip, its better (to me anyway) to know you're doing upper hundreds of chocolates instead of 100, and KNOW they are going to sell. but i also run into boutiques around here that want 40-75% markup (i thought standard was 20%?) so, anyway, does anyone have advice about pricing out wholesale? do you just take the cut and know it is stability and networking? right now i'm doing a standard 25-35% depending on the product, but have no real rhyme or reason behind it (don't hate me, i know that's not smart, i do know all my costs and most labor is covered though)
steve: are you marking them out based on quantity purchased? x amount = % discount or if you buy more to equal y, you get a bigger discount? are you including packaging or just stock packaging to get a product there? (like if they have a case, and dont use bags or boxes)

uggg. i know i should add more wholesale accounts (i just had a winery approach me) but how do you know how much is a good enough discount to entice them, but still make it worth your while? i hear sooooo many who say wholesale is the way to go, but i just don't understand the logic.

PS- no machinery here....just hand-tempering, slabbing and hand-dipping, hand-painting (gonna buy that badger soon though!) and shelling (done by hand)
PSS- going to be bothering you all again soon, as we have an official new retail location (lease and everything!) and now going through setting up a brand new kitchen, wondering about equipment to buy, how to sell walk-by retail (instead of an order by order basis as we are now) etc....
thanks!

and again...steve...wowzers. very excited for you!
PSSS: i want a mint pattie. now. :P


Well, first of all, my CURRENT sales are RETAIL at a local farmers market. I'm hoping that this will help me build a few relationships in the community and begin to generate some demand that I can leverage when talking to other businesses.

My one current "wholesale" (I use the term loosely) is a restaurant which I sell small 2-piece boxes. The boxes aren't fancy because they are using them as small gifts to the table at the end of the meal. Generally one per table. I've done one other wholesale job to a restaurant which was simply the chocolates themselves with no packaging. In this case, they used them for a dessert buffet.

From the reading I've done, if you want other people to resell your product, you need to give them 70% - 100% markup from their purchase price to their sale price. For example, sell them the chocolates for $1/ea and they resell for $2/ea.

In the past, I've made product specifically to fill an order, but with the holidays coming up very soon, and with my farmers market days running into November, I plan to keep an inventory for a while and let that wind down as we reach the end of the year.

Congratulations on your new space! When are you posting pictures?
Steve Lebowitz
Doer of All Things
Steven Howard Confections

Slicing a warm slab of bacon is a lot like giving a ferret a shave. No matter how careful you are, somebody's going to get hurt - Alton Brown, "Good Eats"

#46 Marmish

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Posted 03 October 2009 - 07:25 PM

Steve and Erika,
Congrats to both of you on your respective progress! That's great news.

#47 lebowits

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Posted 05 October 2009 - 02:18 PM

For any who are interested. I've begun an experiment in "price elasticity" if I remember the term correctly from my college economics classes. After doing a bit more research, I came to the conclusion that I was pricing myself a bit higher than the local market. So after fiddling with the numbers, I came to what seems to be a similar "tiered" pricing structure that is more in line with the few local competitors who are doing similar work to mine. Interestingly, my weekly sales have stayed roughly the same in whole dollars. I'm selling more chocolates, and a few more of the higher priced boxes as opposed to the smaller boxes, but the revenue is relatively constant.

I've also started selling in "quantity" to a local restaurant at a "wholesale" price which still provides me a reasonable profit margin since I don't have to package the pieces for them. I hope to have another restaurant offering my chocolates in the next week.

Now, I just hope all the exposure, samples, business cards, etc. pay off in orders for the holidays!
Steve Lebowitz
Doer of All Things
Steven Howard Confections

Slicing a warm slab of bacon is a lot like giving a ferret a shave. No matter how careful you are, somebody's going to get hurt - Alton Brown, "Good Eats"

#48 chocoera

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Posted 06 October 2009 - 10:26 AM

i love marmish :) :wub:

#49 chocoera

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Posted 06 October 2009 - 10:27 AM

oh yes, and steve, i am going back to work on framing the walls on the 16th, so i'll post some pics after that!

#50 Marmish

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Posted 06 October 2009 - 06:12 PM

And I love you! :wub: :wub: Roomies again in MD?

#51 chocoera

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Posted 10 October 2009 - 07:04 PM

uh. yeah. no question about it!

#52 Marmish

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Posted 10 October 2009 - 08:45 PM

uh. yeah. no question about it!


I already put in my personal day request. :smile:

#53 lebowits

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Posted 15 October 2009 - 05:57 AM

For any who are interested. I've begun an experiment in "price elasticity" if I remember the term correctly from my college economics classes. After doing a bit more research, I came to the conclusion that I was pricing myself a bit higher than the local market. So after fiddling with the numbers, I came to what seems to be a similar "tiered" pricing structure that is more in line with the few local competitors who are doing similar work to mine. Interestingly, my weekly sales have stayed roughly the same in whole dollars. I'm selling more chocolates, and a few more of the higher priced boxes as opposed to the smaller boxes, but the revenue is relatively constant.

I've also started selling in "quantity" to a local restaurant at a "wholesale" price which still provides me a reasonable profit margin since I don't have to package the pieces for them. I hope to have another restaurant offering my chocolates in the next week.

Now, I just hope all the exposure, samples, business cards, etc. pay off in orders for the holidays!


So the first results are in and are rather inconclusive. The first weekend of my new pricing, total revenue was roughly the same as before. Sold more stuff, but at a lower price. Not a bad result, but not great either.

Last weekend, I'm not sure what really happened, but my revenue was up 50% from previous weeks. This could be that I'm beginning to gather a following of sorts, or that people are now used to seeing me at the market. This weekend will be interesting as the weather is supposed to be cold and wet which will probably drive people away. I've got my fingers crossed.
Steve Lebowitz
Doer of All Things
Steven Howard Confections

Slicing a warm slab of bacon is a lot like giving a ferret a shave. No matter how careful you are, somebody's going to get hurt - Alton Brown, "Good Eats"

#54 Lior

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Posted 15 October 2009 - 06:05 AM

I will keep my fingers crossed for you! If only I could send you part of our warm sunny weather! It would be good for the two of us!!

#55 xxchef

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Posted 17 October 2009 - 02:23 AM

I wanted to support and encourage you on your decision to sell wholesale. I know a lot of people don’t “get it”, but I do. Our 8-year old business (not primarily chocolates, but they’re a part of it) is about 98% wholesale and has been from the start, by design. I didn’t notice you discussing your reasoning for adopting a wholesale business model but I can think of a handful of good ones without even trying. In our case it stems primarily from a combination of our extreme rural location and disinclination to interact regularly and up close with the public (go ahead, call me a grumpy old hermit, I can take it). Anyway, I speak with some authority in saying that choosing a wholesale core for a small business can be rewarding and profitable.

On to pricing specifics…

My background is restaurant culinary so I am inclined to look at our food product sales here in terms of “food-cost” as generally expressed as a percent of the sales price. I.E. if the ingredients for a product costs me $1.00 and I want to be running a 30% food cost (FC) I need to charge $3.33 for it. Of course FC is only a portion of your total costs (labor, packaging, overhead, etc).

Another common way to look at pricing is by examining the “margin” (profit) of each product. There an old expression “you can’t put percentages in the bank”, but you sure can put margin/profit/dollars there. If you are selling a box of chocolates for $20 and all of your expenses come to $11, your margin is $9.00.

Which would you rather sell a $30 box of chocolates with a 30% food cost that nets you $8.00, or a $20 box with a 40% food cost that nets you $11.00? Well, unless you are getting some other compensation based on either FC% or total sales $$$, you’ll almost certainly want to make that extra $3 per box.

The next consideration is your sales mix. Chances are that over your whole range of products there will be some that cost more to make than others. There will be some that take significantly more labor to make than others. There may be some that have more expensive packaging, are more perishable etc, etc. You will also (as you have mentioned in your posts) want some type of incremental pricing with smaller boxes of chocolates costing more per-piece, than larger boxes. For the sake of your sanity and to avoid a lot of confused customers, you will probably not want to have as many tiers of pricing as all of these variables might suggest you might need. The way around this is through forecasting your sales mix and balancing your entire product line to cost-out where you want it NOT each item. In other words, it’s OK that if you want to be running that 30% FC if some of your items (especially slower sellers) are at 40%, or so, as long as there are some 25% FC fast-sellers to make up for it down the road.

Our decision here was to base our pricing on a margin percent, averaged over the whole product line. In other words we said (something like), “At the end of the year, we want to have had half of every dollar we made in revenue we made be retained as profit”. Toward this end we cost out each and every recipe, calculated all of our related expenses for each product, made some projections on what we thought our mix of sales would be (both on a product-to-product basis and on a retail vs wholesale one) and came up with a pricing scheme that would give us the return we were looking for. Yes, some of our items don’t come anywhere close to giving us that margin but others do a bit better. We review our costs, mix and pricing at least once a year and pretty much have it down to a couple of hours with a spreadsheet now.

The one last important pricing component to consider is your market. You may find that after doing all your calculations and forecasting, that your target prices are out of line with comparable/competing products in your market. If your target prices are too high you need to investigate either cutting your costs or cutting your profit to stay competitive. If your pricing seems too low you’re in great shape to decide if you want to 1) play the price war game and undercut your competition (be aware of the risks of appearing “cheap”), or 2) raise your target price a bit, and make a little more money at the end of each week.

Edited by xxchef, 17 October 2009 - 02:34 AM.

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#56 prairiegirl

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Posted 17 October 2009 - 06:06 PM

I would challenge you to run your financial calculations exclusively on chocolate...and artisan chocolate at that. The beauty of your model is that you have a variety of products ...as you said you win (profit) on some, and barely make it on others. Reminds me of Walmart! Working with high end chocolate is expensive, using organic or high quality ingrediant is expensive, and above all else it is a labour intensive job. I have played with the numbers and ran the cost/profit projections and wholesaling is not woth the trouble.
Also if you live in a depressed economy area where the recession is in full bloom, rents, and other overhead are lower which may make your business model attractive.
Wholesaling..twice the work for half the profit.
Debra
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#57 xxchef

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Posted 17 October 2009 - 10:40 PM

I would challenge you to run your financial calculations exclusively on chocolate...and artisan chocolate at that. The beauty of your model is that you have a variety of products. ..Reminds me of Walmart!...


Well it would be just plain silly to enter into a business that makes exclusively one line of product that you can't make money with. That's why, once we had decided to concentrate on selling wholesale, it was incumbent upon us to include a range of products that would contribute to our success. That’s simply good business. I’m going to take your “Reminds me of Walmart!” comment as a compliment on our profitability, :wink: because I just don’t understand how offering the variety our customers want is a bad thing.

…Also if you live in a depressed economy area where the recession is in full bloom, rents, and other overhead are lower which may make your business model attractive.


What I said was that I lived in an “extreme rural location”, nothing about the local economy (which happens to be weathering the current downturn pretty well, thank-you!), but you are missing the point.

By focusing on wholesale business one can take advantage of inexpensive real estate whereever your location. I see from your eGullet profile that you are in the process of opening a retail store (congrats!). For you to expect your venture to succeed you need a prime location for your store to ensure high traffic and good visibility. You will pay a premium in any market for such a location. A wholesaler can work out of a warehouse in the worst part of town (or as in my case a ranch 200 miles from the nearest metropolitan area). This can bring rent/overhead to an embarrassingly low point so as to be almost an insignificant factor.

While a wholesaler can concentrate all his efforts and funds on building and maintaining a functional, safe and efficient workshop environment, a retailer needs to divide his energies and resources between the working areas and the “front-of-the-house” considerations. Ditto goes for staffing.

Wholesaling..twice the work for half the profit.


There is something else I haven’t touched on regarding wholesale business that I meant to mention earlier. I love the fact that my wholesale customers are (as a whole) regular and predictable. I know that every Saturday, week in and week out I will have a stack of emailed orders sitting in my in-box. I can usually predict within in a few dozen pieces what my base customers are going to order depending on the season etc. That makes for a very organized and sweet work flow. While many retail stores count on repeat business for success I think that substantial, regular weekly orders from retail customers is rare. My YTD annual average sale, across all categories, is $271. My primary wholesale customer base (those who order regularly) is only about 40 accounts. Servicing 40 accounts is a TON faster and easier than what it would take to get that much revenue in retail sales so I don't see it as "twice the work" at all. Also, for the record, our wholesale pricing is actually about two-thirds of our retail price (not half!).
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#58 alexandra

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Posted 09 March 2010 - 11:41 AM

Hi Fellow Chocolatiers, Confectioners, and Pastry Chefs -

I 'd like to introduce myself. I am new to Egullet ( new to selling my goods too! ) Just now finishing up my classes to become a professional chocolatier and opening my business selling wholesale firs, eventually opening up a chocolate shop selling a few bakes goods.
I've met RobertM recently through the people at Cargill. He's suggested I join your forums ( thank you BOB! ) and so I've been reading your posts for a couple of weeks now. Very inspirational and educational! I'm really excited to be joining your forums.

Question :
I'm just learning about pricing and need to start figuring this out quickly as I already have some people who have agreed to test market some baked products for me. Any suggestions? I am a bit overwhelmed right now. For example do I include my packaging in my costs of goods and then look to double that as my wholesale price? Any thoughts on this will be VERY helpful . Thanks!!
:smile: [size="4"]Alexandra[/size]

#59 Edward J

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Posted 16 March 2010 - 11:15 PM

Hang on there a sec...

"Wholesale" has a few advantages. True, it's not perfect, but it has it's advantages.

1)It's a contract and it's sold. Say you get a job for a wedding, 200 boxes of 2 pcs. You know your costs, you know your labour, and when it's done, it's sold--no sitting around getting old waiting for someone, it's sold.

2) If you have a shop like I do, you know you have to have labour at-the-ready to serve. Yes We're a Mom & Pop, but it's still labour filling up display cases and waiting on customers. With wholesale you don't have this wastage, and you can schedule your labour to the greatest effect.

Now, other people buying my stuff and marking it up another 40% or 50% to sell in thier stores is NOT my idea of doing business, and have so far avoided doing it.

But I will offer prices better than walk-in prices for weddings, showers, parties, catering, etc.--as long as it's ot for retail. I can also customize my products (i.e match the wedding colour scheme...) and charge for this service--but only on volume.

It's something to think about....





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