Pricing for Chocolates

[Tarek]

Soooo, how can I get my hands on some of these chocolates?

Tarek

[Desiderio]

Well what can I say, so many great people giving their personal experience feed back and their precious time to answer, so first of all I want to thank you all so much for this .

I indeed want to at least try to turn all this passion ( been there for over 15 years and I think its time for me )into something more than just a highly demanding hobby .\

I know how it works more or less into the food industry , my parents owned a restaurant back in Italy, and I remeber my parents spent their entire day in that place , everything had to be made by scratch ( I made the desserts and breads ),and I have to say that they didnt turn out rich but that was my dad's dream and I am glad they tryed , they would had to be in the market for longer time in order to make out the real money but thats another story .

Pricing indeed is one of the hardest things for me , I always feel guilty to charge money and so on , but My chocolates are special,in this market I really have a shoot here you can't find the type of chocolates that I offer around here ,and my costumers know that.Another thing I have started the selling into an welthy enviorement ,and my costumers are not too worry about the price more or less ,I also noticed that I can tell I have some affecionados that always come back weekly for their chocolate overdose ,so I understand my chocolates hit a certain type of market ( medium high class if I can say that ).I understand that in a[place where there is no the same product can be good and bad at the same time becasue if on one side there is room for my products on the other higher quality means higher prices and people my not understand the difference between a chocolate made with marckens ( or something ) brand and an El rey or so quality.

I dont want to adjust my standard to the costumers in this matter I am pretty committed , I love to work with fine ingredients , expecially good chocolate ,and the freshest ingredients.I may be silly on this but I think that most of you guys think the same,I wont sell a chocolate that I dont like and enjoy and I think we are our own judge.

I think I need to be more sure of what I do and just sit down at the table and calculate all my expenses ( I do keep all my recipiet for everything I buy for the chocolates)and then set prices and keep them that way , without feeling bad for my prices because all I made its hand made with the highest ingredients I can afford and all the passion I have , and like you guys have said if you sell your product at certain price and ofcourse the quality matches it people will be enticed byt that as well.

Well I am glad we start this thread , thank you so much for all you inputs!!

[dejaq]

Vanessa,

we have had some some outstanding advice from some folks, that clearly have a grip on what it takes to prevail, three more things I would like to note, don't discredit unique "out of the box" marketing, I used to know someone that worked as a cival servant in administration, around the holidays IE Christmas, I gave out a few, and I say that cautiously, few samples, they flew off the shelves, once people tried them and word spread. Also by or before, a retail brick and mortar instalation which I feel is critical to the benefit of any high profile (prestige) venue, you would do well by attempting to market to a smaller more elite line of retailers, I am talking about the 4-5 unit gourmet type retail outlets in your area, we sold to (at the time)Sutton Place Gourmet, and all of sudden in one day, you could be moving 4000+ units in a single shot, are you ramped up for that type of production? do you funtion well with no sleep for three days straight? you get the idea...One thing about dealing with brokers, and selling to a "chain" count on the markup being at 100% that means an 8 oz box selling for 19.99 has to be sold to them for less than 10.00-your box alone may cost you 4.50 including shrink wrap, you see it all adds up.The big boys exploit this by tricking out their packaging and loading it up with fluff, once the consumer tastes "really" the way it should be, they are hooked for life, and there from that point on, is a new gauge that has been set, ever after...that's ok confectionery has profit margins in the 300-400% range, if that is, you know what you are doing...

M

[sote23]

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

←

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?

Edited May 26, 2006 by sote23 (log)

[sote23]

Hey there,

I am going to try to answer your questions in a couple of parts;

I think Kerry Beal might be of some help because she is actually down in the trenches right now. When I had Pirouette back in Timonium in the late 90's we were high end, I mean Psychotically high end, my immediate competition was an Austrian that had a well-established reputation, but primarily sold retail, our focus was wholesale and corporate.

You have to understand that what I am about to say in no way should be taken to heart, chief-listen, you have to approach confectionery artistically, but at the same time keep a profit motive anchored in your head. Confectionery and Chocolate manufacture is not for the tame,

It in my opinion one of the most highly evolved eloquent facets of this industry, if you take a look at the dimension cuts down to the millimeter, the ultra tight tolerances of lamentation, how for example, something has to be made to parabolicly fit within a package cell each and every time, the logistics are nauseating. If there were a scale of difficulty from 1 to 10 with 10 being the most difficult, Pastry would be around a 3 chocolate sits up around a 7 or an 8.

You have to ask, how am I going to sell it?

To whom is my market?

Who am I going duke er roo with out there?

Ask yourself those questions before you come up with an arbitrary price point.

Make sure you cover your costs-I mean all of them, right down to the blessed 3M Post it's, I am not kidding, you can lose your shirt if you are not careful.

Do not broadbase your pricing infrastructure, unless your like some of "those" pretentious big name companies that formulate one variety, and simply swap out the flavor continuity, on each production run, if you are one hundred percent discrete on formula profile, naturally you would individually price your chocolates accordingly.

One more thingy, Americans are sold on gimmicks, fancy packaging, colorful bows, fancy shmancy decor multicolored moulded stuff these days, if you sell with the only intent to promote your line thru aesthetics (like some pretty big guys out there

Circa -Now) you may not only find that your market is lukewarm; your bottom line is going to be lackluster as well.

What I am trying to say is unless when you bite into one of your chocolates, and you don't feel your biting into a little piece of heaven, you may have to re-evaluate everything, analyze the science of the way chocolate hits the taste buds on the palate, and you will do well just as we did, the only problem with Pirouette was, I started it on a shoestring...the next time I do this...it will be different.

Michael 

←

hi michael,

your chocolates and presentation are top notch. I was wondering what happened to piroutte? How did you come to a price point? Did you get any formal training?

I'm targeting the high end, but need to work on technique etc.

Your right, if the chocolate doesn't justify the price, there is a problem. I've tried more than one highly regarded chocolate and don't think the chocolate was worth the price.

I'm having trouble finding high end boxes such as what you used. any ideas?

sorry for the million questions.

Edited May 26, 2006 by sote23 (log)

[cotovelo]

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

←

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?

←

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

[sote23]

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

←

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?

←

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

←

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

[sote23]

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

←

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?

←

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

←

christopher,

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

[cotovelo]

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

←

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?

←

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

←

christopher,

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

←

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

[sote23]

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

←

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?

←

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

←

christopher,

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

←

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

←

christopher,

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

[Truffle Guy]

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

←

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?

←

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

←

[Desiderio]

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.

[sote23]

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

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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?

←

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

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Edited June 1, 2006 by sote23 (log)

[lebowits]

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?

[prasantrin]

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.

[pattyc]

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.

[Beth Wilson]

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.

[prairiegirl]

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.

[chocoera]

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.

[lebowits]

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.

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?

[Marmish]

Steve and Erika,

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

[lebowits]

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!

[chocoera]

i love marmish

[chocoera]

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!

[Marmish]

And I love you! Roomies again in MD?