One stumbling block that new hot dog stand owners sometimes struggle with is knowing exactly how much to charge for a hot dog. While there aren’t really any easy pricing guidelines that you can follow, you can find the ideal price points for your business by using your intuition as well as doing a little research.
Hot dogs in the US currently sell for anywhere between $1.50 and $6 and probably have sold for much more than that. How much a customer is prepared to pay will come down to a variety of factors such as how hungry they are, how good your hot dogs look and what other options they have to get a meal or a snack nearby.
If you have a captive audience such as you would in a baseball stadium then you can charge top dollar. If on the other hand you are lined up against many other concession stands that are all competing for business then your pricing would have to be more realistic.
It is important that you get your pricing right. If you price too low then you will struggle to make a profit and your business model won’t be viable. If you price too high then you will be missing out on sales and that will mean that your overall profits will not be as high as they could be.
Here are some pricing tips and some of the factors that you can consider to help you to figure out how much to charge for your hot dogs and other menu offerings.
Local Competition
It is helpful if you can get an idea of average hot dog prices by studying other vendors in your local market. This will give you an idea of what people in your city or area are used to paying for their hot dogs.
After you have done a broad assessment of prices in the wider area you can then look at the prices of the competition in the immediate area around your stand.
You should either look to price your products in line with other local vendors or you should look to price higher than they do and offer more value in the way of service or product quality. Whatever you do, don’t try to undercut other local businesses as there is no sense in starting a price war and doing damage to the industry.
Hot Dog Stand Costs Affect Pricing
When it comes to determining prices it helps if you have a good understanding of your costs in terms of ingredients per hot dog as well as other overheads.
If you have paid a lot of money to get a vendors permit or to secure a concession space at a major event then you will have to have strong prices that reflect these costs.
Go for Volume
In the fast food business you are generally better off pricing your products cheaply and making your profits on sheer volume of sales if you can pull it off. This will ensure that you are clearing your stock regularly, that you can get discounts for bulk buying and that your hot dog stand looks busy and popular. If your location can sustain a decent volume of sales then this is generally better than doing lower volume and looking to make a higher amount of profit on each sale.
Value Meals, Add Ons and Price Points
Consider offering value or ‘combo’ meals on your menu that include a hot dog as well as other offerings such as a drink and a bag of chips. This encourages customers to buy other products from you in addition to their hot dog.
Some stands offer a set price for a hot dog that includes a certain number of sauces or toppings. Customers can then request additional toppings for a small additional charge.
Give some thought to price points and the psychology behind consumer buying decisions. In the fast food market the $5 price point is still a common mental barrier for many folks. If you offer meal combinations that remain slightly below this level then you should do well.
Discounting to Clear Stock
There is no sense taking home stock at the end of the day if you can avoid it. You don’t necessarily want to become known as a regular discounter and have people turn up at a certain time looking for a bargain. However if you are working a temporary location then you may as well offer a discount towards the end of the day to clear your stock.
Price Testing
Make sure that you test prices over time to find out which price points produce the highest profits for your business. Just don’t change your prices too often if you are in the same location or you will find that it bothers your regulars.