Premium Pricing & Marketplace Order Insertion: 8 Benefits
Premium pricing strategies and marketplace order insertion are two of the most groundbreaking tools within the restaurant industry. Many restaurant marketing strategies are available; however, many innovative ideas are built into restaurant tech solutions. With this in mind, premium pricing and marketplace order insertion aren’t the most conventional ideas.
From cutting restaurant expenses to boosting the restaurant profit margin, there are numerous reasons to onboard premium pricing strategies and marketplace order insertion. Read on to learn everything you need to know about both features!
Premium pricing is the concept of listing products or services at a higher price to indicate a better quality compared to competing brands. A premium pricing strategy is a way for businesses to encourage consumers to purchase their products, due to the assumption that they must be better than other options on the market due to the higher price.
If you’re a business owner or restaurant manager contemplating a premium pricing strategy, ensure that you set the correct prices. This technique doesn’t mean to increase the prices as much as you’d like. In fact, the rule of thumb is to set prices about 20% higher than competitors.
It can seem counterintuitive to increase prices to gain more traffic. However, this is why businesses have to be so strategic about it. Prices have to be high enough to signal a higher quality product, but close enough to alternatives to not deter potential customers.
Benefits of Premium Pricing
A premium pricing strategy is a smart move for many businesses. Vendors that offer delivery services charge restaurants a fee. By offering premium prices on delivery platforms, companies can cut popular overhead expenses.
As one of the most psychologically-backed marketing strategies, here are some of the best benefits of a premium pricing strategy:
- Restaurants can stand out amongst their competitors. Higher prices aren’t always a bad thing in the food and beverage space. It’ll leave consumers wondering what could be different compared to other local options, piquing their interest in the brand. Perhaps your restaurant offers a casual dining experience. Implementing slightly higher prices will give the illusion of being unique from other casual eateries. But how? Customers will only find out by visiting the establishment.
- Restaurants can establish a more upscale brand. Consumer behaviorists find time and time again that people are more likely to choose a brand priced slightly higher than other options. A higher price tag creates the perception that if something costs more money, the quality must be better, too. So if a restaurant is similar to others in the local market but each menu item is priced roughly 20% higher than its competitors, consumers will likely view it as a more favorable option. Pair a premium pricing strategy with an upscale and classy aesthetic, and you’ll be that much closer to fallin within the “fine dining” category (see: what is the difference between fine dining and casual dining).
- Combat the expenses of using third-party delivery apps. It’s no secret that food delivery apps can increase net sales for restaurants. Not only do they allow restaurants to serve more people, but they help grow the entire customer base. However, these benefits come with a high price. Third-party apps charge restaurants fees that add up rather quickly. To combat these expenses, most restaurants implement a premium pricing strategy. By collecting more revenue from each online order, it’s less likely that they’ll lose out on profits due to the third-party fees.
- High prices are suitable for delivery apps. Studies show that consumers are likely to spend more money on delivery apps than in a brick and mortar restaurant. This concept is likely due to the ability to spend more time scrolling through the selections. Since a premium pricing strategy is used for third-party apps to avoid losing revenue, the tendency to spend more works out.
Marketplace Order Insertion
Marketplace order insertion is a feature that allows orders from multiple marketplaces to enter one POS system. Innovative restaurant technology solutions come with order insertion features for its convenience. Plus, using such tools is a foolproof way to remain competitive.
Remember that marketplaces are the online ordering apps that customers use to place orders. These apps include brands like GrubHub, Uber Eats, DoorDash, and Caviar.
A restaurant POS platform is an essential part of the business model. Using an all-encompassing system that can accept and process orders from multiple apps helps ensure simplicity.
Now that you’re more familiar with the concept of marketplace order insertion, let’s dive into some of the top benefits.
Benefits of Marketplace Order Insertion
Marketplace order insertion is a fairly new feature within many restaurant technology solutions. It has the ability to simplify operations, increase an eatery’s profitability, and expand the entire customer base.
With all of this in mind, some of the most universal perks of marketplace order insertion include:
- Keeping all orders in one POS system allows for seamless operations. The host(ess) of any restaurant will be able to organize all of the orders, prioritize shift duties, and avoid any mixups. With just one device, restaurants can track every order, regardless of the third-party apps used to place them. Nowadays, the wait staff in eateries no longer struggle with sorting and preparing orders. Instead, the system can guide them toward efficient operations.
- Restaurants can become more accessible to the public. When a restaurant is available on every third-party app, they’re much more accessible to customers. Typically, customers might only have an account with one or two platforms. With this in mind, expand your customer base by partnering with every platform, while using marketplace order insertion to organize operations.
- Restaurants can receive more orders on a daily basis. Since marketplace order insertion allows eateries to accept orders from across the marketplace, they’re able to accept more orders overall. In turn, this should lead to higher profits. However, remember that this is a situation where premium pricing is key. Even though you’ll see more orders entering the POS system, it’s expensive to utilize third-parties. So, charge higher prices on ordering apps to balance additional expenses.
- Hosts can lessen the number of tablets needed for their job. Limiting the number of tablets to just one can help any feelings of work overload. And in the event that a restaurant is understaffed, the simplicity will be a valuable quality.
Many marketplace order insertion products, such as Connect, can place orders right into a POS system as if a server manually entered it. It’s simple, and can take a restaurant to the next level. Want to learn more? Book a demo today!
Frequently Asked Questions About Premium Pricing
Premium pricing and marketplace order insertion go hand-in-hand. If you implement one strategy, adding the other can maximize operational efficiency that much more.
Bear in mind that premium pricing is a solution to marketplace order insertion. It’s a unique strategy that many brands use. However, it’s even more important to implement it when there’s vast competition. To learn more about the basics of premium pricing, check out the following selection of frequently asked questions.
What Is an Example of Premium Pricing?
A prime example of premium pricing would be a restaurant charging more for food due to an upscale atmosphere. When eateries create an environment that feels more upscale, customers might perceive the food’s quality to be better than others. In this scenario, a restaurant could be more profitable despite serving the same ingredients as competitors.
Why Is Premium Pricing Used?
Premium pricing is used to rise above competition in the marketplace. Companies use premium pricing strategies due to psychological consumer behavior. Naturally, consumers believe that if a product is pricier than others, it must be of higher quality.
What Are the Four Types of Pricing?
The four types of pricing are:
- Dynamic pricing
How Do You Define a Premium Product?
A premium product is usually one that costs 20% more than the average market price. Launching a more expensive product is a way to stand out amongst the competition. So, premium products should only be slightly higher in price.
How Is Premium Pricing Calculated?
To calculate the premium price for your product, use the following formula:
Premium Price = Your Price - Competitor’s Price (benchmark price) / Competitor’s Price (benchmark price) x 100