How to price restaurant menus. And how to be a smart consumer by knowing how people price restaurant menus
Rapp is a menu engineer. He helps restaurants maximize revenue by hacking common flaws in human decision-making. For example, by simply removing “$” signs from prices, people are less intimidated by them. And he advises against listing items from least to most expensive, because that focuses the consumer on price. Instead he mixes up items, making it hard to find their price — thereby encouraging the customer to emotionally commit to something before finding out what it costs. But my favorite strategy of his is that of putting some absurdly expensive item on the menu. Rapp doesn’t expect many consumers to buy it, but having it there makes expensive items appear cheap by comparison. Think about it: How many times have you ordered a bottle of wine in the middle of the price range?
I've read a lot about how to price web services, or negotiate deals, using some of the same principals outlined here. But these ideas really do go all the way down to basic pricing on menus.
Fifteen years ago my parents owned Indian restaurants and I did all the desktop publishing work, including menus, newspaper ads, and all the signage. I was 13 years old and hadn't read anything about design or pricing. I probably thought I was being clever by listing items in price order; that's what made sense in my brain.
What I find more interesting than how to price things, is how to be a smart consumer given I know how people price things. As you may know, I'm a smart consumer, I find deals, I'm good with money, and I'm very interested in consumer protection.
It's important for consumers to know the tricks retailers use to up-sell them so they can be avoided. For example, through college it was a common trick to order the second cheapest bottle of wine on the menu. "It will be better than the cheapest!" This is wrong. First of all, it's wrong to order wine based on price so arbitrarily. Second, you have to assume a retailer knows people do this and will price a bad bottle to be the second cheapest.
People come to me a lot for advice on purchasing things: cars, computers, cameras, you name it. More often than not, I steer people to purchase the low end, intro model of whatever they want. Get the base Macbook. Get the base Canon DSLR. Don't buy every option on the BMW you want.
Most people see the lineups or options lists on the products they want and tend to over purchase. These retailers have done their research to get you to do this!
Instead of being influenced by the price of items, their order on a menu, the relative cost of one item over another... A smart consumer should decide exactly what they need, and buy exactly that. Not more, not less, and make that decision with as little influence from company marketing as possible.
