Weird how this came to me.
Our Saturday ritual – up early, quick shower, and off to the grocery store. Nothing very exciting in that.
But somewhere between our house and the grocery store, we made a stop for coffee, and I had a true “Ah ha” moment, an amazing business revelation. Keep reading, because I will come back to that in a moment. There is something I gotta’ tell you first.
A few years ago a professional photography Association in another city hired me to give a convention program to their members.
I arrived in town mid afternoon, checked into the hotel, and spent the rest of the day hanging out at the business owned a fellow from the trade association.
I was unable to tell whether or not he was successful by the look of his business.
There was junk strewn everywhere, and hundreds of framed portraits sat on the floor, leaning against the wall. They were stacked seven or eight deep.
The only thing in the place not covered by a fine layer of dust was the business owner himself.
He complained to me about a customer of his who was unhappy with a p photograph he had made for the customer. The print was an expensive, 30 x 40 inch print, white background, white floor, and the children in the portrait were wearing white clothing.
The image was impeccably clean except for a sizable dark brown smudge on the floor in front of the children.
It seems this portrait was made just prior to Easter time. The photographer had placed a live lamb in the photograph, and the smudge was where the lamb had pooped!
The photographer had cleaned up the mess, but the stain remained on the white seamless paper. He didn’t bother to change the paper, or even put a small piece of white paper over the brown smudge to hide it when he made the photogaph.
What was he thinking?
And for some reason, he could not understand why his customer was unhappy. Go figure! It was truly weird.
Did the customer have a wonderful experience with this photographer? It’s a safe bet they will never return. At some point during the day the photographer confided in me his business was not doing really well. Duh!
So what does this have to do with a trip to the grocery store?
On the way, we stopped for coffee and tea. My wife ordered a large coffee. Yes, $5. She stops for one of these every morning while driving to work.
How much does the store pay for the $5 coffee? My inquiring mind wanted to know, so I asked a friend who happens to be a consultant to the convenience store/gasoline station industry.
He told me one large bag of coffee beans (130 pounds) makes something like 9,000 cups of coffee.
Think about it. The coffee is worth two or three cents. When a grocery store sells coffee packaged in bags or cans, it’s worth 20 cents per serving. If they sell it at a restaurant as a service, the coffee is worth $1.00.
But when a coffee shop sells it as an experience, it has a value of $5.
From 2 cents to $5 is a 25,000% markup! And customers were lined up almost to the doorway to get their coffee.
The prices you can charge are all about the experience your customers have. So I ask you, what kind of experience do customers have with you and your employees?
There is a reason some restaurants can charge $20 for a hamburger, or $150 for a steak. How about a pizza for $42, a haircut and style for $450, a man’s suit for $2,600 off the rack and $5,000 tailored, or an automobile for $375,000?