Price Lab — model a price change before you make it

Raising prices is the highest-leverage change a small shop can make and the one most owners guess at. Price Lab replaces the guess with arithmetic done against your own sales.

Price Lab is one of the Cool Features, included in every account. The most important thing to know about it is printed on the screen itself: nothing here changes your products. It is a model. Prices only move when you go and change them yourself.

What it does

Pick a period — the last 30 days, this month or the last 90 days — and apply a percentage, say +5%, to every product at once or to each one separately. Price Lab replays your actual sales in that period at the new prices. For each product it shows:

• Sold — units in the period.
• Price and New price.
• Unit cost — what each sale actually cost: from the recipe for food, or from restocks for a retail product.
• Gross Profit now, and after.
• Profit impact — what the change is worth over that period.

Because it runs on real volumes rather than a spreadsheet's assumptions, the answer already accounts for your mix: the products you sell most move the total most.

Choose a long enough range

A short range gives a confident-looking answer built on a handful of orders. Pick at least a month, and preferably one that includes both your busy and quiet patterns. The screen tells you when the range is too short to model.

If prices rise, how many sales do you lose?

Price Lab starts by assuming everyone keeps buying, which answers "what would that period have earned at these prices?". The slider under the price change, If prices rise, how many sales do you lose?, tests the other question. Drag it right to assume more customers stop buying, and Price Lab shows how many fewer items that means and whether your net profit still rises or falls.

The slider is your guess, not a forecast. How your customers will react is judgement, and it is where your knowledge of them beats any model. Try a few positions: if net profit still rises when you assume a fair number of lost sales, the change is a safe one. Three things worth weighing:

• Small rises usually pass unnoticed. Twenty cents on a $6 dish rarely changes anyone's order. A jump through a price people notice — $9.99 to $10.50 — is a different matter.
• Regulars notice the item they always buy. Consider leaving your signature item alone and moving everything around it.
• Your competitors set the ceiling, your costs set the floor. Price Lab tells you where the floor is; only you know the ceiling.

A useful discipline: if the modelled gain is small enough that losing two customers a day would wipe it out, it is not worth the risk of the change. To work out exactly how many sales a rise can afford to lose, the free Price Lab shows it as a single number.

A workflow that works

1. Check your unit costs are current in Inventory. Every figure here is built on them, and a six-month-old cost makes the model optimistic.
2. Model a modest rise — 3% to 5% — over at least a month.
3. Read the per-product rows, not just the total. High-volume items carry the result; a big percentage on something you sell twice a week is noise.
4. Decide per product. You are not obliged to apply one number to everything, and usually should not.
5. Change the prices in Menu / Product (Products in retail mode), then watch gross profit in Reports for a fortnight.

That last step is the one people skip. The model gives you an expectation; the following two weeks tell you whether it held.

When the answer is not a price rise

If Price Lab says a rise barely helps, the problem is usually cost, not price:

• Unit costs drifted upward without the menu following — see suppliers.
• Portions grew quietly. Recipes say one thing, the kitchen does another.
• Wastage is eating the margin before it reaches the till.
• Discounts are larger in total than anyone realised.

Fix those first. They cost your customers nothing.

Frequently asked questions

Does Price Lab change my product prices?

No. It is entirely a model — it replays past sales at hypothetical prices and shows the profit difference. Your products keep their real prices until you edit them yourself under Menu / Product, or Products in retail mode.

Does Price Lab account for customers buying less after a rise?

Only if you tell it to. It starts by assuming everyone keeps buying. The slider If prices rise, how many sales do you lose? lets you assume some customers stop, and shows whether net profit still rises. How many really stop is your judgement; the slider shows what each guess would cost.

How much should I raise prices?

There is no universal answer, but modest and specific beats broad and dramatic. Model 3% to 5% first, read the per-product rows, and consider leaving your signature item untouched while moving the items around it.

Is Price Lab free?

Yes, it is included in every account. The recipe screen also shows cost, margin and gross profit per product, which covers the underlying arithmetic for one product at a time.

Why does Price Lab say there are no sales in this period?

Either the range is outside your trading history or it is too short to model. Pick a longer range — a full month is a reasonable minimum.

Next: the Kitchen Display System.