I nominate this advice for being tattooed onto the forehead of web startups. I heard something about a spot of trouble in the market, CPMs in freefall, waily waily waily? What if we stopped trying to be all things to all people for nothing and instead tried being pain relief to people who are familiar with the notion of paying money for that?
(I, for one, am raising prices in February, because I've been undercharging for years now. Silly me.)
Unfortunately, much of that brand loyalty seems to be to Starbucks, so the little guys don't get much of it.
The problems (and attempted solutions) the article's author described sound to me like they all stemmed from a lack of interest in paying any attention to the market. He admits that the most prominent and loyal types of coffee shop customers (commuters who just want to grab a cup for the road, and laptop warriors who want to sit tight and work for several hours) weren't interested in his business, and then seems surprised that he failed to make a profit? Color me unsurprised.
You can make money in the service industry, eventually -- but you have to provide something that people want. Simply being in love with your own clever ideas is seldom a good path to profitability.
Absolutely. I live about 7 miles from the nearest town, 30 miles or so from the nearest big city (Minneapolis). I would love a quiet, sit-down coffeeshop that had good coffee, tea, (and yes, cocoa :-) and pastries along with WiFi. I have no problem paying a small hourly fee for the WiFi or better yet an hourly drink minimum.
It's nice living on a farm in the middle of nature, but sometimes I want a different environment and I don't want to go all the way into the city or large suburb to find it. I'm sure there are many around here with a similar wish.
I know I'm not considering all the other business costs here. But, shouldn't someone be able to "Wal-Mart" Starbucks and copy their product but cut the margins to put them out of business?
Another example is the people with laptops who are buying $5 tickets in the form of cups of coffee to rent a few hours of de-facto office space. Are they going to quibble if it's $6? If the ambiance is a little cooler, or the coffee a little hipper, or the wait-staff a little cuter, an extra dollar might not matter to them, or might not be enough to chase them to the Starbucks across the street.
In short, part of the point of going to a coffee shop is to get away from seeing yourself as a "price taker." Otherwise, you can get your caffeine cheaper at McDonalds.
Do those of you reading this pass up one coffee shop over another for $1 difference in price? $0.50? $0.25? I'm honestly curious.
Well, we're not talking web startups. The demand/supply curve is omnipresent and sometimes lowering the price is the ticket: