At our espresso bar, a double shot of espresso costs US$2.00. A cappuccino: US$3.25. For some, it may seem quite a lot but when you break down the costs of the ingredients we use, it’s an appropriate amount – and is certainly more expensive than Starbucks (a necessity).

For me, the equation is simple. We will charge these prices because they are appropriate for the quality you are receiving. Some operators look to decrease their costs by sourcing lower priced (and lower quality) product. We do the opposite: we are constantly looking for the absolute best quality we can find, and we’re more than willing to pay more for that quality and charge appropriately. It is our standard.

Quite frankly, if we’re unable to pursue this kind of business model then I’d prefer to be out of business and back to making serious money selling my soul to the Hollywood Machine.

It has of course backfired. A table of four oldies, in on recommendation, chose the cheapest coffee on the menu. A bemused Barista Boy pulled four good shots and had to endure an earfull of ignorance when they came to pay….

Pricing is a huge and extremely relevant issue, particularly at the moment and it clearly links back to your trust post.

I spent some time with a client today going through all the hassles of changing his menus (both printed and menu boards) as well as re-programming his till for the new VAT rate. Let’s put aside, for one moment, the utterly moronic decision to reduce VAT and concentrate on the trust and the price. Initially he wasn’t going to bother because of all this hassle and the fact that the 2.5% really was inconsequential but to do that breaks the trust and reeks of profiteerinag and, regardless of how much hassle it is. you really want to mess with that perception at your peril.

Charge too much, abuse the trust and appear to be greedy and you make life very difficult for yourself.

Starbucks has changed the pricing equation for all of us. Regardles of what we may think about them they have created a pricing structure that allows us to price coffee at a level that makes sense in high street locations. The public doesn’t know the economics behind this obviously and many of them still tut and huff and puff as they work out their own “cost of making a cup of coffee” and arrive at the inevitable conclusion that we are all making a fortune in this business.

The issue is that operators abuse this position. The classic scenario that I relentlessly see is people opening with almost no concept of how to create great coffee and a great experience and feel they have earned the right to charge “10p less” than Starbucks and then wonder why they’re out of business in six months. They think it’s fine to say “Starbucks coffee is shit, everyone knows that” and to be able to compete with some utopic and utterly delusional image in their own mind of how they run their own (shit) business.

So pricing is absolutely vital and it’s a very complex formula. It needs to be brave but avoid greed. It needs to take into consideration competition, cost of basic product (but only a little), staffing costs, training costs, marketing costs, positioning within the market etc. etc. etc.

Once you have developed and earned the trust then you can go about shifting and tweaking price to justify all the incredibly hard work that has gone into its creation.

But trust and pricing is a very delicate mix at the moment and in the current climate operators need to be VERY carfeul about appearing to be greedy.