One challenge that I encounter in this business of running exotic cuisine cafes is that of working out the prices at which I should sell the (exotic) dishes. It is a very delicate balancing act, because on the one hand, I have to ensure that the exotic dishes I sell are not too expensive – otherwise the targeted customers won’t be able to afford them. On the other hand, if I sell the dishes at too low a price, there is a risk that I won’t be able to recoup my costs, and that subsequently I won’t be able to maximize the profitability of my exotic cuisine cafés. So the prices have to be low enough for my customers to afford the dishes, and at the same time high enough to allow me to recoup my costs and make a reasonable profit.
While trying to price the exotic dishes, I take into consideration all costs that go into the making of the dishes. I add up all those costs. Then I add a profit margin. The resultant figure is the price at which I sell the dishes. I liken the procedure to the one that is followed by banks that issue Visa and MasterCard-branded credit cards. In working out the interest rates to charge for the credit cards, such banks normally take into consideration all their operating costs, on top of which they add reasonable margins, in order to arrive at the rates they should charge the credit card users.
In trying to work the prices to charge customers for exotic dishes, I also have to take the prices charged by my competitors into consideration. This is a tricky affair, because there are situations where I would have preferred to charge higher prices, but where I am forced to charge lower prices in order to remain competitive. But regardless of these considerations, I always ensure that the price I ultimately charge is one that covers the cost of my inputs adequately, and one that leaves me with a decent profit margin.