Look Into Food Brand Pricing: Part 1 Competitive Strategy

When looking for ways to increase profit food business owners often look for shortcuts like a quick coupon campaign, or cutting key ingredients from the recipe, decreasing the quality of their good. These strategies, while possibly increasing the bottom line in short-term, isn’t necessarily sustainable.

One thing that remains as the end all be all is Pricing, for you it is essential to understand Food Brand Pricing. Finding the right price can increase your profits exponentially and it doesn’t have to come at the cost of marketing campaigns or slashing the quality of your product for short-term gains. This two part series will look at pricing strategies common in the food industry and how your business can leverage them.

Now we will look specifically into Food Brand Pricing. In a study done by McKinsey & Company, they found a 1% improvement in pricing results in an average of 8% increase in profit. For any kind of business working on small margins, this number should especially stand out and demonstrate how much growth can occur with an optimization in pricing.

In this part, I’ll discuss a competitive approach to pricing. This strategy requires you, the seller, to set a price based on competition and your fit in the market. This strategy is deployed a lot among businesses, especially in the food industry.

Market Fit

Initially, it’s important to understand where your food brand stands in the eyes of the market and consumers. If you have spent extensive time developing a brand, as we do here at NewPoint, you should have a good understanding of what you’re portraying to the customer.

Food Brand Pricing

Surveying consumers who have or have not purchased about their perception of your brand can also give you another picture on how your company fits or ask these questions internally:

  • What differentiates you from others?
  • What kind of consumer are you looking to attract?
  • Are you looking for small or large quantity purchases?
  • What do you want to portray to customers with your price?

Food Brand Pricing: Competitive Strategy

Price below market

This strategy is to drop your price below competitors, which allows you to capture the attention of consumers with the low price. This approach aims at increasing volume enough to make up for the loss in margins.private label vs brand

Private labels have been able to utilize this strategy for years and gain a considerable market share of the snacking industry

However, for small businesses, this is rarely sustainable and succeeds even less in the food industry. Another downside to this strategy is the possible damage that a lower price can have on your brand. Over time a low price can reflect a low-quality product, despite its attributes.

Price Match

Setting your food brand price even with the competition, allows the quality of your product to truly separate itself from competitors. This can allow you to provide value to consumers in other ways than just price.

If your business utilizes NewPoint or already excels in marketing, then you will be able to really differentiate from the rest using this strategy. If you truly believe your product is superior to your competitor and have proved it, this strategy will allow you to go head to head and steal those customers from a lesser product.

However, if you’re fighting toe to toe with a large corporation, chances are they have higher margins than you.

Price above market

Lastly, pricing your product above the competitive prices demonstrates that you’re providing that much value to the consumer. This tactic is used by luxury food brands or products with attributes that truly separate themselves from competitors.

Grey Goose

Vodka brand, Grey Goose, has prices that double or triple other competitors. While it’s just vodka, their branding and “quality” allow for them to take advantage of this strategy.

However, as a small business, you might be forced to price above market. In this case, you will need to dig deep and truly set yourself apart. Below are a few examples of this in play in the food industry. You can market your way around this by adding more weight to these features.

  • gluten-free/clean/Non GMO ingredients
  • creative packaging
  • distinctive taste
  • culture behind the brand

Try to create value that is unique to your brand and invest in your Food Brand Pricing.


If you have any questions or would like to learn more about NewPoint, please reach out to the NewPoint team — interested in more food marketing topics? Please visit our “Intel” page or check out the book: Moving Your Brand Up the Food Chain.