The bitterness of poor quality remains long after the sweetness of low price is forgotten.
~~Benjamin Franklin
Sticker shock is not, in and of itself, a bad thing.
I remember seeing Rogue’s (Colin Gasko) bars priced at $18 back in 2016, and thinking Wow, they must be something special. Colin was touted as the best craft chocolate maker by the New York Times, and multiple experts; at Cacao Portland, where I saw my first Rogue bar, it was presented to me as if it was a bottle of fine wine. I passed on buying it; “special” at that price, when other really good makers’ bars were priced under $10, wasn’t convincing enough for me. Maybe if it had been an origin besides Madagascar?
Rogue Chocolatier: Why You've Never Heard Of The Best Chocolate Maker In America
~~food writer Megan Giller
It might be (maybe? does anyone pay attention to these things?) worth noting that both Rogue and Cacao Portland are no longer in business.
We makers have been having a bit of our own sticker shock lately, on the buying supplies end of things, as the main ingredients we use to make bean to bar chocolate have been rising—cacao, cocoa butter, sugar, milk powder, oats (and just about everything else)—alongside utility costs, packaging, and even the website platforms where we sell our goods.
Often, when supply costs go up retail prices follow, which got me wondering if makers have started raising prices on products. Pricing is a semester’s worth of business school, and if this is your first foray into selling (anything), I’m sorry to tell you it’s one part economics and a zillion parts buyer psychology: there is no one standard formula for figuring it out. Market (who’s going to buy our product, and what other folks are already offering in that market and their pricing) is just as integral to the price tag of that product as is the COGS (cost of goods sold).
It’s that “who is going to buy our product” that’s hard to pin down, especially if we’re new to selling.
In craft chocolate we can look at the pricing other makers are using (can = we should look) but we won’t know if that pricing is a true reflection of what the market will bear; meaning, when we do this we are using a market-driven strategy that sets the price of a product based on what consumers are willing to pay. Some biz experts call this value-based pricing.
There are a few things to consider.
First, the statement above, We can never know if that pricing is a true reflection of what the market will bear.
Craft chocolate is not like other sectors of craft food. I seriously doubt that artisan, small batch jam makers mingle with the bigwigs over at Smucker’s. If you’re looking for handcrafted jam it’s probably not found in the jam and jelly aisle of your local Walmart or Target.
Yet in craft chocolate, small, nano-batch makers have long been co-mingled alongside big, very big, “craft” companies: Guittard, for example, which was listed by Megan Giller in their Top 50 Bean-to-Bar Makers in the United States , posted an annual revenue of 2 billion USD in 2023. Map Chocolate is on that same list; yet, even including the revenues from my chocolate sales, chocolate school, consultations, and writing here at the NB, I don’t come anywhere near that figure 😆
While big makers like Guittard and Raaka and Scharffen Berger and Tcho often have VC (venture capital) funding via investors, their business model is straightforward, and very clear:
generate as much revenue as possible,
by manufacturing their products in the most cost-effective and productively efficient way possible.
Their goal is to make as many bars as possible to sell at a pricepoint attractive to as many customers as possible. Wait, isn’t that the goal of small makers, too?
Reality check. Handcrafting small batch chocolate not only means making fewer bars, but our input costs (the price we pay for beans etc) are higher. Our value in the marketplace is different than the big makers’ value: think of it like fast food vs a lovely cafe. Replication + widespread availability is a different goal, with different equipment/outlay needs, than the goal of a hands-on, local maker.
More importantly, the customers may be very different. Or, they may seek the widespread availability when they need “easy, and cheap” but also seek out something rarer, and “special.”
See why there’s no one-size-fits-all pricing? This is one reason why, if Raaka bars sell at my local Whole Foods for $4 a bar, that doesn’t mean Map’s bars have to be $4. Or, if Ritual’s or Omnoms are $6.47 mine be $6.47. I’d only need to price them in line with the shared marketplace, if that marketplace is where I want to sell my bars, in this example, Whole Foods.
Which, I don’t. One reason is shown in the photo below.
ICYMI, here’s the statement from up above:
While big makers like Guittard and Raaka and Scharffen Berger and Tcho often have VC (venture capital) funding via investors, their business model is straightforward, and very clear.
From big maker down, the business model tends to gets murky. By this I mean not everyone in craft has the same biz model. This is why pricing solely based on “what other makers price” is risky.
Besides existing to make a product to then make a profit, a business can exist to provide tax breaks. At least, that’s our tax code here in the US.
A business can exist as a real estate investment with a business sitting atop it, paying rent to the biz owner/landlord.
A business can exist to provide self-employment for the owner(s).
A business can exist as a hobby, meaning, the owners love it but don’t depend on the revenue as livelihood.
A business can exist without the owner having any clue how to do business.
Think of these biz models as “subsidy” models: an outside entity (not just the revenues) is helping cover the costs of doing business. This typically means there’s padding, a soft cushion to land on if things don’t go as planned. There’s nothing wrong with this: our focus here is whether or not this is helpful for the purposes of determining pricing.
In pricing we need to not just randomly look at what “other” makers are doing, but try to determine which business model best reflects OUR business model goals; I say this because if we look to a craft company for our pricing insights, and that company is essentially subsidized, they might be able to have a lower price, and that pricing does not tell us what the market will bear.
This is where “what the market will bear” meets what (who) is our market.
To decide pricing we have to know who our chocolate is for. If you tell me, Mackenzie! my chocolate is for everyone! I’m going to ask you about your shoes.
Do you wear Nikes? Birkenstocks? Vans? Blundstones, Jimmy Choos, Manolo Blahniks? Where do you wear them? Wait, what, you wear a bunch of different brands depending on what you’re doing, who you’re with, work vs play vs workout vs standout, mood, weather, season, whim? This is where the three bears come in, btw. Too hot, too cold, vs just right.
Our customer needs to see our chocolate as just right. It’s not up to us to think we’re the baddie of bean to bar: that’s for them to decide. We make it, we make it with them in mind, and then we price it (wait for it)
just right.
It all has to be just right.
There’s another (very) murky bit: bars that look like craft/bean to bar but aren’t. Yes, I love my chocolatier friends! But just looking at the input cost + time cost of bean to bar, it’s clear that it is an expensive, time-consuming business model. The equipment (roaster, cracker, winnower, melanger(s), tempering plan vs what’s needed for buying and working with pre-made chocolate is not just more expensive, but has higher energy/utility costs, and the space needs are bigger.
Not all chocolatiers who mould up bars use premium brands like Felchlin or Conexion, or buy couverture from small batch makers (thank you, if you do).
So, there’s the craft/bean to bar market to consider + the not-craft/bean to bar but the consumer can’t tell the difference market, + our customer base.
Our question, given the rising costs of so many things, is to answer what happens now, if “the amount consumers have been willing to pay” changes?
If we’re feeling the pinch, our customers and potential customers are feeling the pinch. If we’re cutting back on Netflix and the Next Batch subscriptions (plz, reach out if you need the info paywalled but it’s not in your budget xxoo), they are very likely cutting back, too. Yes, even the ones who “can afford it.” Scarcity mindset has nothing to do with wealth, everything to do with a fear of losing something.
Raising prices willy-nilly can have a teetor-totter effect: bar prices go up, buying of those bars can go down. In a weird why are we humans so weird glitch, we don’t all respond to pricing the same! Ever looked at something and thought the pricing was too good (too low) to be true? and then wondered if something was wrong with the item? Conversely, ever put something in your shopping cart thinking “this is special enough” despite it being outside your usual budget?
We have to be thoughtful, and by this we need to give our pricing some serious thought.
My perspective on chocolate pricing for Map:
I’ve been selling my chocolate, which means setting prices on my products, since 2014.
I started my bars (offering a range of plain dark, milk, and inclusion bars) at $8 for a .70g bar.
In 2016 I raised the price to $10, when I began offering wholesale accounts.
In 2018 I kept dark bars at $10 but raised inclusion bars and milk chocolate (dairy and plant-based) to $12 (these were/are my highest-demand bars) which is where they’ve been the past six years;
In late 2018 I started using my custom moulds, which meant my bars went from .70 to .57g but at the same time I also began using much more expensive packaging.
I now limit my wholesale to a few accounts, which means my whsl/retail split is 10/90% retail sales, so I can afford to keep my pricing where it is, which feels right to me.
Takeaways to help with deciding pricing
Bar size (mould size) matters: we can’t simply look at other makers’ pricing without noting their bar size/weight. One risk of tiny bars is that the pricing needs to be in proportion to the size (the gist is, here’s a small-sized bar) whereas a larger bar cn seem more-ish.
DO NOT (yes, all caps) use large/roomy packaging to “hide” a smaller bar. Ever open a bag of potato chips and feel bummed that the bag was the size of a VW but the chips filled only ⅓ of it?
Packaging matters. Always. This hasn’t changed since I began crafting, and what also hasn’t, is that it doesn’t have to be posh/fancy. However, that said, it 100% must be aligned with your brand and your customers. The answer to what should my packaging be is determined by who is my chocolate for.
Make a list of bigger craft makers | mid-sized craft makers | small-sized craft makers and visit their websites. Look at “special offers,” like free shipping, subscription boxes, look at their plain dark pricing vs milks vs inclusion bars.
Take a good look at makers’ websites: try to describe the vibe you sense in one sentence. Ask yourself, Who does this vibe appeal to? Who is it for?
Look at any sales analytics you have: which bars sell best, are the hardest sell, which bars do wholesale accounts re-stock the most often, which bars do customers email/DM asking for? etc.
Whittle down your product lineup: are you aiming to be the grocery aisle of craft? Overwhelm is the n1 reason potentially new customers, especially those new to bean to bar and our Wow this isn’t a Hershey bar’s price tag pricing don’t click the add to cart button, or make a purchase.
If you’re new to wholesale vs retail sales, here’s an earlier post that is helpful.
Thanks for being here, and happy chocolate,
Mackenzie
I did a pop up chocolate shop on the hottest day in July and sold five cases of chocolate in two hours. Then I did another one in August and sold seven and a half cases. I have pre sold a case for my next pop up shop. I raised prices due to having to get overnight shipping. I sold chocolate bark at $22. Bars at $18. Nobody asked about price. Context matters. This was all in a sound bath studio of all places! I have been taking notes for two years on selling chocolate for research on a shop in a chocolate museum. What I discovered was price did not matter. It was other factors.
i am working on selling bon bon and nut butter in addition to my bars (i sell my bars very coffortably for 10 bucks each. not too much and not to little. 10 is also easy to add subtract and multipy.) not sure how to price the bon bon, thinking 4 for 10 or 5 for 10? help. the nut butter think 10 for 4 to 6 oz. help??