Why People Pay $10 for a Croissant (And Ignore Yours) | Pricing Strategy

Why do people happily pay premium prices for some brands while ignoring cheaper alternatives? 

In this episode of Full Fat Marketing, Leonora breaks down pricing psychology, perceived value, and why customers buy justification, not just products. A must-listen for founders, hospitality brands, bakeries, and anyone struggling with pricing.

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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

There are people right now happily paying$10 for a croissant. Yes, you heard that right. No, I am not making it up. It is wild. For a croissant. We're talking flour, butter, layers, crumbs in your car afterwards. And the weirdest part, they're not offended by it. They don't care. They happily pay it. They're delighted. They cue for it. They post it. They recommend it to their friends. They bring one home for someone like they've returned from battle and are delighted with it. Meanwhile, another bakery is struggling to sell theirs for$4. And this is where founders misunderstand pricing completely. Price is rarely just about the product itself, it's about perceived value. I'm Minora and this is the Full Fat Marketing Podcast, where you'll hear the uncomfortable strategy truths for FB brands that most people won't tell you, but I will. From everything I've told you, remember this. People do not buy price, they buy justification. Customers do not stand there running spreadsheets in their head. They're asking something much simpler to themselves. Does this feel worth it? That feeling is built through cues like presentation, reputation, anticipation, social proof, scarcity, trust, story. If those cues are strong enough, higher prices feel way easier to accept to a consumer. If those cues are weak, even cheap can feel seriously overpriced. That is why pricing is so embedded in psychology. Let's use New York, because New York City is brilliant for exposing how pricing actually works. You can go somewhere like Lafayette, Grand Cafe and Bakery and happily pay close to$10 for the famous Supreme, which is like a New York roll style pastry. Basically, it's a circular croissant filled with like chocolate, strawberry, I think they've even got pistachio now, and it's got this like really delicious sort of chocolate glaze drip on top, and even, I think, even like some nuts on the top. Anyway, so many people started copying this croissant roll thing. Well, the ones that have not had that specific one, but I have had versions of them, and it is 10 out of 10, just so amazing, just delicious. I think I would actually pay that. Like I won't lie, for like the actual original, yeah, I would pay it. But at the end of the day, it is flour, butter, sugar, and layers. You're borderline having to take out a payment plan for it, and people cue for it. They film it, they post it, they tell friends to go, they treat it like almost like a mad event. Why? Because it's become the one thing everyone talks about, something worth experiencing, the cool bakery moment. Now compare that to somewhere else in the same city selling a croissant for around$4. It's still good, it's still buttery, it's still flaky, it's still delicious, it's still perfectly nice with a coffee, but it does not carry the same meaning. And that's the whole lesson around this. It's not really about pastry, it's about perception. One's being judged as breakfast, the other's being judged as a whole experience. And experience alone can really charge differently. And there are five levers that really increase that willingness to pay. If you want stronger pricing power, look at these five levers. One, clarity. If people instantly understand what makes you different, price resistance drops at that point. Confused brands get compared on price much, much faster. Number two, proof. Think of things like reviews, cues, testimonials, press, visible demand. People trust what others already value. Number three, experience, such as packaging, store environment, aesthetic, website feel, ease of ordering, service quality. A premium experience supports premium pricing as well. Number four, story. Why you exist, what makes the product special, who made it and what it stands for. What are your morals and values? What's the ethos of the brand? Stories make these products so much more memorable. And there is, I've got a really good example of this. I was working with a bakery and they had sort of multiple locations, and it was this really sort of like cozy, really nice aesthetic. And I had a really great chat with the founder and the marketing manager, and we were really discussing, you know, how their marketing could improve. And I remember I asked them, what's the story of the brand? They both sort of looked at me and the founder laughed and he said, That's actually a story that's really close to my heart. I had done obviously, you know, my research on this business before I sat down with them, and I hadn't seen anything about this sort of really lovely story. And the story was basically that they had started the bakery based on the founder growing up with his mother making all these delicious bakes in the kitchen, and he almost wanted to like share them with the world. And not only that, obviously this bakery became really successful, but she is the recipe developer. The mother is the recipe developer still of these bakes. Obviously, that in itself is such a selling point for the business because I mean everyone would feel emotional to that. The fact that the mother is still the recipe developer is insane. I mean, it's such a brilliant story. And I said, Why isn't this anywhere? And they said, Oh, we didn't think it was maybe like relevant to advertise to people. We didn't really know. And I said, This is literally your jackpot. This is where somewhere can go from being well known and liked to being, you know, to explode and suddenly being the place that people really want to go to, especially for that story alone. So story is so important. Now, if you'd say to me, okay, like we don't have a story, there are other ways that you can almost build like a brand story around it, but make it more like about the product or where the product's from. For instance, like if you have started like a tea company and you source that tea, let's say in Vietnam, you know, could you make the story about the farmers who farm the tea? I mean, there are so many different avenues you can go down, but it's really important to get that emotional side of things because customers buy into stories, even more so now, because the world is so plastic and materialistic and all about like social media that having these stories are really what set brands apart. And people like backing brands that have these stories. It's really, really important. And number five, identity. What does choosing you say about the customer? And this one is huge. People often buy the version of themselves that a product helps express as well. And I know I say this all the time, but it is, it is such a key factor. And so many brands actually end up undercharging. And some founders panic the second sales slow down. So they lower the prices or the discount, like I mentioned in yesterday's episode, but lower prices cannot fix like weak positioning, bland branding, a really forgettable experience for the customer, no unique selling point or lack of repeat behavior. It's like changing shoes because you have a headache. Wrong problem. Customers aren't necessarily saying it's too expensive, they're saying, I just don't see enough value here, like that isn't worth my cash, and they're not ready to part with the cash because of it. It's a very different issue. So if you're a founder, operator or marketing manager listening to this, here's the practical takeaway from this episode, and here's how you can test if your price is actually the issue. This week, try and improve something about your business before touching on the price. It could be packaging improvement, sharpening your home page message, showing stronger proof, improving customer experience, clarifying what actually makes you different. And before discounting, ask Do customers understand why we cost more? Have we earned their trust properly? Does the brand look the par? And are competitors clearer than us? Is the buying experience frictionless? And are we attracting our target audience or the right audience? If those answers are sort of weak or a bit vague, work on those first. When value feels obvious, price becomes easier to defend, and when the value feels vague, even cheap, feels expensive. And that's the Full Fat version. Thank you so much for listening. And remember, you can listen to the Full Fat Marketing Podcast wherever you get your podcasts with new bite-sized episodes released daily from Monday to Friday. You can thank me later for that. Oh, and if you enjoyed this episode, please make sure to leave a rating and a review as it really helps more people find it. I'll see you next week and have a fabulous weekend ahead!