Introduction
Pricing is not just a number — it’s a signal to the market. In the food industry, it tells your customers where your product fits: is it premium, everyday, artisanal, mass-market? Yet, many startups and small brands struggle to get it right. Price too high and you lose customers. Too low and you lose profit — or worse, credibility.
At FoodResso, we help food entrepreneurs build pricing strategies grounded in real costs, customer insights, and positioning. In this article, we break down the different approaches to pricing, show you how to calculate and adjust, and share examples that blend global thinking with regional insights.
1. Understand Your True Cost: The Base of All Pricing
Explanation:
Before choosing any pricing strategy, you must know your true product cost. This includes more than just ingredients — it should capture:
- Direct material costs (raw ingredients, packaging)
- Labor (time spent preparing, handling, etc.)
- Overhead (rent, utilities, logistics, storage)
- Compliance and certifications (Halal, Organic, ISO)
- Distribution margins (retailers, marketplaces)
Real-World Case:
A startup selling refrigerated hummus in Dubai was losing money despite good sales. After a cost audit, they realized they weren’t factoring in chilled transport, which added 15% to their cost. They adjusted prices and renegotiated delivery routes.
Western Example:
An artisanal cheese company in Vermont, USA, faced unprofitable margins because they didn’t include aging room energy costs. By adding those overheads and shifting to direct-to-consumer subscription boxes, they improved margins by 20%.
What to Do:
- Use a cost sheet template to break down all cost components.
- Review costs quarterly to adjust for inflation, packaging, or supplier changes.
- Add at least a 30–50% margin for sustainability depending on your model (direct vs. retail).
2. Choose a Pricing Strategy: Cost-Based, Value-Based, or Competitor-Based
Explanation:
There is no one-size-fits-all method to price your product. You can combine several models depending on your goals.
- Cost-Based Pricing: Add a markup to your total cost. Simple, but may ignore what customers are willing to pay.
- Value-Based Pricing: Price based on the perceived value your product offers — health, convenience, taste, sustainability.
- Competitor-Based Pricing: Anchor your price against market benchmarks, then adjust based on your unique edge.
Real-World Case:
A date snack brand in Saudi Arabia positioned itself as a healthy indulgence. Though their cost was lower, they priced at 30% above competitors because their sleek packaging and influencers helped them own the “guilt-free treat” positioning.
Western Example:
RXBAR, a protein bar brand in the US, positioned its bars as clean-label and transparent (with ingredients written on the front). Despite a higher price point ($2.49 vs $1.99), customers responded to its no-BS branding and simple ingredients, leading to strong repeat purchases and eventually a $600M acquisition by Kellogg.
What to Do:
- Use cost-based pricing as your floor.
- Use competitor analysis to set your pricing zone.
- Use value-based pricing to define your ceiling.
3. Consider Your Route to Market: Direct vs. Retail vs. Foodservice
Explanation:
Your sales channel significantly affects your final price. Selling through retailers or distributors requires you to build in their margin — sometimes 30–50%. Foodservice (like supplying cafés or hotels) may require volume discounts. Selling direct-to-consumer gives more margin but higher marketing and fulfillment costs.
Real-World Case:
A plant-based milk brand in Egypt started by selling through health food stores with 40% retail margins. When they moved to D2C with a website and cold delivery, they increased profits per unit but needed to spend more on paid ads.
Western Example:
Blue Apron in the US initially priced meals for direct subscription delivery. However, logistics and CAC (Customer Acquisition Cost) made margins thin. They restructured pricing and improved margins by introducing premium add-ons and seasonal bundles.
What to Do:
- Create a pricing model for each sales channel.
- Factor in shipping, platform fees, distributor commissions.
- Adjust packaging or SKU sizes per channel if needed.
4. Test and Iterate: Pricing Is Not Static
Explanation:
What worked at launch may not work as you scale. Pricing is dynamic and should evolve with consumer feedback, new competitors, cost changes, or packaging upgrades. Smart startups continuously test and optimize.
Real-World Case:
A Moroccan bakery brand launched cookies at 25 MAD per pack. Customer feedback showed high perceived value, so they tested a price increase to 30 MAD with no drop in sales. Profits rose by 18%.
Western Example:
Beyond Meat launched its products with premium pricing in the US. But after customer feedback and competitor entries, they ran promotions, tested value-packs, and offered subscription discounts, which boosted repeat purchases.
What to Do:
- Use A/B testing when possible (especially online).
- Run short promo periods and watch conversion vs. retention.
- Track which price points get repeat purchases.
5. Psychology of Pricing: Small Numbers, Big Impact
Explanation:
Pricing isn’t just math — it’s psychology. Rounding, visual cues, and packaging language influence how your price is perceived.
- Use charm pricing: 9.95 feels cheaper than 10.00.
- Bundle products to increase average cart value.
- Highlight price per serving, especially for health or meal-prep products.
Real-World Case:
A protein bar brand in the UAE changed its tagline from “10 AED per bar” to “Only 3 AED per protein-rich snack” when sold in a pack of 12. Sales increased 40%.
Western Example:
A UK-based granola brand priced a box at £3.99 but highlighted that it provided “12 premium breakfasts for only 33p each.” Customers felt it was a better deal, even without changing the price.
What to Do:
- Test different price anchors on your packaging.
- Display savings for multi-pack SKUs.
- Avoid pricing that looks arbitrary — use tiered logic.
6. Keep Pricing Honest and Value-Focused
Explanation:
Customers are more educated than ever. Transparent pricing and delivering real value is better than fake scarcity or inflated pricing tactics. A loyal customer base is built on trust.
What to Do:
- Be transparent about price changes.
- Educate customers on what makes your product better.
- If premium, justify it — better ingredients, less sugar, sustainability, etc.
At FoodResso, we help brands build pricing strategies that grow profit and trust.
“Price is what you pay. Value is what you get.” — Warren Buffett
Final Thoughts: Price with Purpose
Pricing isn’t a spreadsheet exercise. It’s a strategic choice that shapes your brand perception, financial health, and growth path. By understanding your costs, testing intelligently, and delivering true value, you can price with purpose — and profit.
If you’re struggling to price your product or preparing to scale, FoodResso can support you with cost modeling, SKU optimization, and pricing audits.