TEA PRICING


Trends and Tips on developing and operating a tea business.

TEA PRICING

Postby pankaj » Dec 8th, '11, 23:38

I AM IMPORTER OF BLACK TEA IN MEXICO. KINDLY ADVICE ON PRICING STRATEGIES
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Re: TEA PRICING

Postby Chip » Dec 8th, '11, 23:50

I have moved this topic to TeaBusiness Planning and Running where it will be more at home.

I have left a "shadow" temporarily under its original location, TeaChat Announcements. But this shadow will be deleted.
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Re: TEA PRICING

Postby Pasquale » Apr 11th, '12, 23:03

You know this is a good question. I've been planning on opening my own Tea'cafe one day-hopefully before I become old and decrepit-and this was something that came up in my discussion with a friend and my parents. Prices...

Even though I don't plan to open my own Tea/coffee cafe-type facility any time soon this would be nice to know if anyone has suggestions or strategies or just plain ol'tips when it comes down to this part of the buisness.
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Re: TEA PRICING

Postby mbanu » May 6th, '12, 06:01

Mexico has quite low tea consumption; A pricing strategy must work around this. Will you be working within the constraints of the existing tea market, or looking into growing the customer base? If within existing constraints, your pricing strategy will be very dependent on understanding the pre-existing market and what they are willing to pay for. Then, once you understand that, you calculate whether or not you can provide it while still remaining profitable. :) If you are growing the customer base, you will probably not be profitable for several years. This is tough work, and once you have done it, you will start attracting competitors. So you must carefully calculate in the gap - the amount of time after you have grown a market and before it is large enough that competitors arrive, since this will be where you will recoup your costs.

For a tea cafe (assuming that there are enough tea-drinkers around to support it), pricing depends on volume. There are certain costs which remain the same no matter how much tea you sell. If you are a high-volume cafe, it is possible to spread these fixed costs over many cups of tea, so the price can be lower. On the other hand, many places don't have enough tea-drinkers to support volume establishments, and some owners don't like the rushed environment. In that case, the owners might simply try to create an environment where the higher prices are justified; maybe offering some rarer teas, or offering an "experience" (perhaps specializing in tea ceremonies such as High Tea or the Japanese tea ceremony) that is more than the cup of tea a customer might have at home.

This is reined in by the local market. If you are providing the same tea at a higher price than your competitors, you will need to either differentiate yourself to make it clear why your tea is a better value even at the higher price (better service, for instance, or a more convenient location), or you will need to lower your costs to match their prices.
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