One of the most difficult aspects of managing a hotel pantry is determining the prices for the items. It’s an exciting yet challenging element to successful market management. Price the products too low and you run the risk of losing money. Price them too high and you might scare off guests from purchasing anything, which also leads to losing money.
If you’re in this predicament, don’t worry: you’re not alone. Many hotel managers struggle with pricing products in their pantry, because–after all–they’re hotel managers, not retail professionals. So what do you do?
Ultimately, it comes down to perspective. It’s essential that you view the pantry as a both a convenience for guests and a way for your hotel to make an extra profit. Why put in all the time and effort in managing the pantry if you don’t stand to benefit from it?
Determine Your Profit Margin
Before you price an item, you need to understand two important factors: your guests and the labor involved.
If you’re charging $300/per night, your guests won’t be as price-conscious as guests of a low-budget hotel where rooms go for $59/night. Likewise, if you’re managing an economy hotel, guests will be less likely to buy items that are marked up 50% or more.
Once you understand your guests’ pricing expectations, think about the labor you put into managing your market. Even when using a hotel pantry management program like Supply Wizards, there’s still work involved like stocking the shelves and keeping it clean and organized. You should earn revenue from that work.
Use a Pricing Formula
Now that you know what your profit margin will be, you can use this simple formula to determine the price:
Price = [(Cost of item) ÷ (100 – Markup Percentage)] x 100
So for example, let’s say you wanted to price a candy bar that costs you $1.00 at a 40% markup. Here’s how you would calculate it:
Retail Price = [(1.00) ÷ (100 – 40)] x 100
Retail Price = [(1.00 ÷ 60)] x 100 = $1.67
It might seem like a lot to manage a hotel pantry. To a certain extent, it is. But with the right understanding and perspective, the market can be a great amenity for your hotel. Guests like the convenience of them, resulting in more sales and extra profit for you.