You’re Not Too Expensive... You’re Just Not Worth It (Yet)

A lot of brands think they have a pricing problem, when what they actually have is a value perception problem.

In this episode of Full Fat Marketing, Leonora breaks down why customers push back on price, what makes something feel worth paying more for, and why charging premium only works when the rest of the brand is doing its job.

If you’ve ever felt frustrated that people will not pay your prices, this episode will show you why price is rarely judged in isolation and what actually makes a brand feel worth it.

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And if you’re building a food, drink or hospitality brand and want help applying these strategies to your business, feel free to reach out at leonora@lrbcreative.com

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Disclaimer: Insights shared are based on Leonora’s experience with food and hospitality brands and are for educational purposes only. Results may vary.

Transcript

SPEAKER_00 0:00

One of the most common things founders say is we can't raise our prices. Our customers won't pay it. And sometimes that's true, but a lot of the time that's not actually a pricing problem. That's a value perception problem, which is kind of like why would I pay that problem? And sometimes, if I'm being completely honest here, it's also a you've completely made these numbers up problem. I've got a crazy story for you. I had a meeting with some potential clients a few months ago and we were going through their menu. Now I had a quick look at some of their competitors online and immediately noticed these guys were charging exceptionally higher. I I mean, really, and I want to make this super clear, it wasn't slightly premium. I mean, I was sat there thinking, hang on, why is this so much more expensive than every other place around it? And the thing that made it worse, there was a place literally two doors down from them selling the exact same thing that was rammed all the time. It was super, it was packed, it was constantly busy, there was a clear demand for it, and these guys were super quiet, like the kind of quiet where you start wondering if you've accidentally even come in before opening hours. And they were charging double, if not triple, the price. Now, if the brand had been incredible, if the experience had been unbelievable, if it felt like something genuinely worth paying more for, fine, I'd get it. But that was genuinely not the case here. It was not giving luxury or like almost like a cult brand or a special destination. It was giving a very confident mood board. I would say even overly confident. So I asked them why they were priced like that. And their answer, honestly, I mean, I can't even to this day, it bamboozles me. They actually said two things. They said we picked a brand that we thought looked nice and then priced ourselves around that. And not only that, they decided to just pluck a number out of thin air. And I'm genuinely not making this up. That was their strategy. It wasn't like margin structure, ingredient cost, or positioning or anything. No, it was just, well, they seem expensive, so let's seem expensive too. And it gets worse. The chef had not even calculated the cost per ingredient for each dish. So they also had no real idea what they were actually making in profit. Which is, I just I think that that makes this whole story 10 times worse. Which means the whole business was essentially being run on aspiration and blind optimism, which to be fair is how more hospitality businesses seem to be operating than anyone would like to admit. A lot of pricing decisions are not actually being made strategically at all. They're being made emotionally based on what feels premium, what we think another brand is doing, and the reason behind it, what the founder likes. That is one I see all the time, based on what the founder thinks is a good price, what sounds high-end, or what they think they should be able to charge. Now I'm really sorry, but that is not pricing. That is fan fiction as far as I'm concerned, and it gets businesses in trouble really, really quickly. Now I'm Lenora, and this is a full fat marketing podcast where you'll hear the uncomfortable strategy truths for F and B brands that most people won't tell you, but I will. Customers are not sitting there calculating your margins. We all know that. They're not thinking about your supplier costs. They don't care. They're not factoring in your rent, they're not emotionally invested in your overheads. They're making one very simple judgment. Does this feel worth it? That's it. That's the whole thing. That's all they care about. And worth it is not just about the product, it's about everything around it. You can charge more when the whole experience and brand feels stronger. And this is where so many brands get stuck. They look at pricing in isolation. They go, oh, can we charge X amount for this? Wrong question. The better question is, have we built something that makes this amount feel reasonable? And here's the real uncomfortable truth. If customers are constantly pushing back on your price, it usually means one of three things. Number one, it feels generic. If your product looks like five other options around it, why would anyone pay more for you? You're not just competing on quality, you're competing on perceived difference, which is kind of like why would I pick you over anything else? And if there is no clear difference, price becomes the only thing left to compare. That is exactly what happened with the clients I mentioned. They were trying to charge premium prices for something that did not feel remotely premium enough to justify it. So now customers had a very easy decision: pay less somewhere busier and more obviously in demand, or pay double for a place that had no energy and no clear reason to go to. That is really not a difficult consumer decision. And this is where so many brands get pricing wrong. They think if we price higher, people will assume we're better sometimes, yes. But only if the rest of the brand is doing the heavy lifting. Price can signal quality, it cannot invent it. That is the real difference. Number two, the experience doesn't support the price. This is my favorite, because you can't charge premium and deliver average. People will feel that instantly. If the brand looks sort of mid-okay, the menu feels really clunky, the service feels rushed, the environment feels really flat, the price will then start to feel wrong to the consumer, even if the product itself is decent. This is the bit people miss. Price is never judged in isolation, it's judged in context. Everything is relevant, and context is everything. That is why some places can charge, say, like$9 for a matcha, and people will still post about it lovingly on Instagram, like they've just had some sort of spiritual awakening. And other places charge like$3 and it still somehow feels offensive. That is not maths, that is perception here, and that is essentially buying from a brand. Number three, you're not owning your price confidently. This one gets overlooked all the time. More times than I would like, in fact. If your pricing feels really awkward, inconsistent, slightly apologetic every time someone orders, customers will feel that immediately. Confidence is part of value perception. If you don't look sure about what you charge, why should they be? And this shows up in loads of little ways. How the menu's written, how things are named, how the team speaks about the offer, whether the brand presents itself like it's known its place in the market, or whether it feels like it's trying on a price point, it's not emotionally grown into yet. And this is where I think so many founders hold themselves back. They think, okay, we need to lower the price to get more customers in. Please don't fall down this trap. Sometimes, yes, but often the smarter move is this: increase the perceived value of what you're offering. That is where the real margin comes from. Not just lowering the number and hoping for the best. Because if your business only works when you undercharge, it's really, really not a growth strategy. It's quite literally a hostage situation. Look at brands that charge more successfully. They're not just better, they're clearer, sharper, more distinct, super confident. Everything lines up. Nothing feels accidental. That is what makes the price feel super justified. And honestly, this is why discounting can become such a trap as well. The second you start training customers to wait and always wait for a better deal, you're telling them this isn't actually always worth full price. That is very hard to then undo. Once people start seeing your price as negotiable, it becomes a lot harder to make them feel conviction around it again. But I suppose that's a chat for another day, to be honest, because I could honestly go on and on about this topic for ages. But if you're a founder, cafe owner, operator, or marketing manager listening to this, here's the practical takeaway of this episode. Stop asking yourself, can we charge more? And start asking instead, why doesn't this feel worth more yet? And I would look at four things to be able to answer that. First, do we actually know our numbers or are we pricing based on what we feel like? If you've not worked out your ingredient cost, your margin, your overheads, and what each item is actually doing for the business, you're really not pricing this strategically. You're guessing. And please don't bet on a hope and a prayer. Guessing is expensive. Do not let your pricing strategy be. I sort of felt like$20 was right. That will cause real issues for your business. Second, where are we blending in when we should be standing out? If your brand feels interchangeable, your price will always feel high. This is just how it works. People will only tolerate a premium when they feel there's something meaningfully different, better, sharper, or more desirable happening. If there isn't, they will compare you on price all the time and you will lose. The third, what in our experience weakens the perception of value? This could be your menu, your packaging, your service, your website, your signage, your ordering flow, your tone of voice. Really small things matter here, way more than people think. Customers aren't just making one giant pricing judgment, they're making loads of tiny ones. And those tiny judgments build the bigger feeling of worth it or absolutely not. And fourth, are we presenting our price with confidence or quietly apologizing for it? Customers feel that immediately. We feel it. You can tell when a brand is fully behind when it charges. And you can also tell when it's essentially whispering, Oh, I'm so sorry. Like I'm sorry to be charging that much for a scone. That energy matters a lot. And the practical move after this episode is this do a full value audit if you can. You can do this yourself. Look at the business as if you are the customer and ask, would I pay this without hesitation? Then ask the less glamorous question: do we actually know what we're making on this? Because both are a hundred percent essential for your business. One is brand, one is business. You need both together. And if the answer to either is, maybe, well, that's the gap you need to figure out and fill. And tomorrow I want to talk about something that sounds helpful, but is quietly making a lot of brands harder to actually buy from. And once you see it, you can unsee it. And that's the full fat version. Thank you so much for listening. And remember, you can listen to Full Fat Marketing Podcast wherever you get your podcasts, with new bite sized episodes releasing daily from Monday to Friday. You can thank me later for that. Oh, and before you go, and if you're enjoying the podcast, I'd really love it if you left a rating and a review, as it really helps more people find it. See you tomorrow.