If you’ve ever raised your prices or even thought about it, you probably wondered if you’d lose customers.
Since today’s consumer seems hyper-price-conscious it might seem counterintuitive if we blurt out, “Raise your prices, and your customers will be happier.”
Well, there it is. We said it. There’s no longer a reason to ask the question – “Can raising your prices really boost customer satisfaction?”
The answer is a resounding yes, it can. You know that satisfied customers are integral to your business model. While there are many ways to create happy, satisfied, loyal customers, one way to do so is by raising prices.
Let’s examine a 2014 Cornell University study.
This study found that customers enjoyed their food much more when they paid more for it. Those who paid less for the same food didn’t like it as much.
In the study, researchers offered nearly 140 participants a high-quality all-you-can-eat Italian buffet. They offered the buffet to some customers for $4 and to others for $8. The food and the restaurant were constants.
They asked the participants to evaluate the food and the restaurant. They also asked them to rate their first, middle and last taste of the food.
What did they find? They learned that customers who paid the steeper price, $8 for the buffet, enjoyed their food 11% more than the diners who only paid $4.
Worth noting is that both groups ate the same food, the same amount of food and at the same restaurant. The people who paid less reported feeling guilty about the meal and overeating. They also mentioned that as the meal went on, they progressively felt worse about their food and the restaurant.
The researchers learned that diners ate the food in equal amounts at both price points, but that the pricing affected how they felt about their meal and how they evaluated the restaurant.
Their suggestion at the end of the study: consumers should eat at the most expensive restaurant they can afford because their experience will be better, and they won’t eat more.
This study begs the question, “Are you charging enough for your food to have highly satisfied customers?”
If you aren’t charging enough for your food, we’re going to give you some more reasons why you should.
When you charge a fair price, it engenders customer satisfaction and loyalty. (tweet this) Your customer’s satisfaction is directly influenced by the perceived value of your food. If your customers think your prices are too low, they won’t expect as much from your restaurant or your food.
For example, if your prices are high, your customers expect good food and great customer service. They expect a premium product. If your prices are too low and more budget-friendly, they’ll have lower expectations and believe they can find something better somewhere else.
In order to improve overall customer satisfaction, you need to price your menu high enough. You’ll also find that once you increase your prices, you can provide better customer service.
This is in part to the better tips your servers will receive, and in part because you can purchase better food products. When you offer lower prices, you have less resources. This makes it harder to deliver a good meal. When you charge more, you can allocate more resources to a higher level of service and higher quality food.
Stanford researchers found that price does affect service quality. They found that price changes people’s experiences with a product.
Let’s imagine your restaurant offers two bottles of wine – one for $10 and one for $50. Your customers will assume the more expensive wine is better. Is this true, or is it just perceived to be true?
The study’s researchers found that customer expectations for service quality increase as the price rises. They deduced that higher customer satisfaction is based not on real quality, but perceived quality.
The take-away here is that if you raise your prices, it’s important to deliver a premium product to ensure the highest customer satisfaction.
Now that you know raising your prices could have a positive impact on customer contentment, let’s look at the three rules of customer satisfaction.
Rule #1 says to build customer satisfaction by meeting their expectations. Best restaurant business practices dictate the importance of customer loyalty which comes from customer satisfaction. Your customers expect to be happy when they leave your restaurant.
If they leave unhappy just once, you’ve most likely lost them forever.
Rule #2 expands on the previous rule, and says you must exceed your customer’s expectations. Go above and beyond.
When you increase prices, we’ve shown you’ll boost customer satisfaction. With those boosted prices comes the expectation of good service. Provide this, and your restaurant has moved into a category all its own. You now have an edge on the competition.
Exceed their expectations, and you’ve justified your higher prices.
Rule #3 says make them smile and amaze them. This is customer satisfaction that propels your restaurant to the top of the list. Once you’ve made them excited to visit your restaurant and completely satisfied, you will dominate your marketplace.
The Cornell Study goes a long way towards explaining the benefits of increasing your prices. It’s a warning as well – don’t cut your prices because it could dramatically affect how your customers feel about your restaurant and your food.
Lastly, we’re going to provide you with a few more reasons to raise your prices:
Does all of this mean you can have bad food and high prices? We doubt it. Aim for great food, superb customer service and higher prices, and you’ll find your customer base growing as your loyal customers spread the word about your delightful restaurant.
Have you raised your prices and found that your customer satisfaction has increased? If so, please share your experience below. We’d love to hear about it.