How I charge 40-75% more for the same product and keep customers happy

As you may know, I converted my Guatemalan house into a little guest house. I charge breakfast separately, and it costs $4.70. I think even at Denny’s in the US you can get $2.99 breakfasts. Around here it is generally around $2.60-$3.35.Guatemala is a destination for cheap travellers on a budget, and paying 80% more for the same eggs can seem far fetched, although I have had nothing but praises for my breakfasts. Why? I add VALUE so people are happy to pay more.

A random Guatemala breakfast will have

– 2 eggs, usually greasy and overcooked

– a little tomato sauce on top of the eggs

– a spoonful of pureed beans

– 3 corn tortillas

– maybe some horrible coffee.

Cost of breakfast: $1.20 sold $2.60, a 2.16x margin.

 

My breakfast will have

– 2 organic eggs from my hens, perfectly cooked.

– Tomato sauce on the side, enough to serve yourself 4 times.

– Beans on the side, big portion as well

– Some fruit salad. Bananas are $0.12/lb and mangoes $0.15 each, so for $0.2 I can make an awesome salad.

– Fresh fruit juice with the fruit salad leftovers.

– Awesome coffee according to BF who is a coffee lover, I don’t drink coffee.

– My homemade bread which gets complimented every time as foreigners are so tired of eating corn tortillas all day.

– Everything will be served hot at the same time, as another of my pet peeve here is getting the coffee, then while it gets cold your eggs are served, and as you watch your eggs get cold, or are half way through them, they finally bring the corn tortillas!

People generally won’t eat much more than a one person serving, but having a full plate on the table which they can get a second helping from looks like luxury to them. Since the food is on a serving plate, I can put it back in the fridge if it was untouched, unlike leftovers from someone’s plate.

I also include juice AND coffee, when most restaurants will offer either or, or charge an extra $1 for coffee and $1.50 for juice. Here, all is included, so you don’t have to worry about adding up prices, comparing the value, and sacrificing the pleasure of having your juice so you can save $1.50.

Cost of breakfast: $1.8  sold $4.70, a 2.60x margin. By adding $0.60 of value to my breakfast, I can charge $2.10 more.

I don’t do breakfasts to make money to be honest, I offer them because it is the only option around here to get a morning meal and otherwise people would have to drive away on an empty stomach. Plus I eat breakfast anyway, so cooking for 2 or for 4 people is pretty much the same. I couldn’t offer a subpar product and look people straight in the eyes. Moreover, I want my time to be worth the effort, and by offering a slightly nicer product, I can afford to charge 80% more.

The same way, my rooms are about 25% more expensive than a similar alternative 10 miles away. That price difference will get you

320 thread 100% cotton sheets. If you have ever slept in synthetic on a hot Guatemalan night, you’ll know it is worth it. A set cost about $60 for a queen size bed, instead of $30 for synthetic. They are hand washed which damages them more than the washing machine, so they should also last longer than synthetic.

Fluffy pillows. Most pillows come from the second hand store nearby so it’s not like I spent a ton of them (maybe $10-ish) but they are feather and much, much nicer than the hard $15 synthetic ones you can buy new.

Big clean towels. Have you ever been to a hotel where they give you a micro towel that looks more like a rag? I hate that. Here you get big comfy towels, some I got for $15 in Guatemala City, some for $5 at Macy’s in Miami. They wrap your whole body and do dry.

A big head shower with hot water. Electric shower heads are the norm in Guatemala, and for an extra $20, I got the widest head that makes the hottest water. It is not really a problem here as it is so hot you could shower with cold water but you do feel the difference with the regular shower head.

3 ply toilet paper. Another thing most hotels in Guatemala skimp on, even the decent ones. At $0.80 a roll I see no reason not to please the guests.

A brand new Palmolive soap. I hate those mini hotel soaps that don’t foam and don’t wash. Another $0.70 and customers get a nice smelling big soap.

Bilingual staff with a sense of customer service. That is not a given in Guatemala, and most staff doesn’t have a clue how to fix a problem, as they fear foreigners and have zero initiative. They are left on their own as the owners are rarely here and are generally unable to handle things the way you would like them to. My housekeeper is on WhatsApp if I am not home, and asks if she can do a nice gesture in case clients aren’t 100% pleased.

The extra cost to me per night is about $5 and it makes a world of a difference. People are generally more than happy to pay for the extra comfort. That is the best return on investment you can have, as you can charge an extra $20 per night for that $5 spent on top.

The same applies to any work you do. If you go the extra mile, are responsive, friendly, on top of your project, you can command much higher rates for your services than someone who barely delivers what was agreed.

 

Do you agree that a little extra effort can be charged tenfold to the customer? Are you happy to pay more for better service or would you rather have a bare bone product at a low price?