Courage, Pricing and… Pastéis de Nata

By Dino Tartaglia.

A Pastel de Nata, if you’ve never experienced this creamy food of the Gods, is what we in the UK would call a ‘posh custard tart’. It’s a Portuguese creation and is one of a number of icons of this fabulous country (I recently moved to the beautiful city of Porto, Portugal, from the UK)

Here, especially at Manteigaria in Porto, arguably the finest exponent of this fabulous culinary creation in Portugal, there is much that a pastel de nata can teach us about business, especially when it comes to pricing and, more critically, price elasticity.

BTW, ‘Pastéis de Nata’ is the plural of ‘Pastel de Nata’.

Firstly, All Pastéis de Nata are NOT created equal! Go to any main street in Porto, and you’ll find at least a dozen places selling the basic pastel de nata. It’s culturally embedded that you often have one of these with a coffee, more so than any other pastry or sweet treat (and Portugal has many of these mouthwatering butter-, cream- and sugar-laden tidbits).

They’re all laid out on similar trays in similar displays, and they’re typically served alongside a small coffee, an ‘expresso’ as the Portuguese call it. To the untrained eye, they all look more or less the same.

But this is where the similarity ends.

Taste a ‘PdN’ from Lidl in the UK, and you’ll taste arguably the worst end of any specimen of the tart.

Try a typical offering in your average tourist trap in Lisbon, and you’ll taste an even worse example.

Pick up one in a decent little side-street pavement café, and you’ll get a decent experience.

But come to Fabrica de Nata or Manteigaria, and you’ll taste something incredible as far as PdNs go.

And then, you begin to build up the #1 superpower of all Entrepreneurs,

discernment… but applied in this case to a pastry.

Now that we know that not all PdNs are created equal, what do we look for to identify ‘quality’?

Price is NO guarantee… which is good news! 

Bizarrely, you might think, the more expensive a PdN, the better it probably is.

No, no and thrice no!

A PdN in a fabulous ‘Miradouro’ - the name the Portuguese give to fabulous viewpoints of a city or landscapes - will set you back North of €2.50.

In a nice little pavement café, it’s 80p.

Lidl Porto does a surprisingly decent PdN for €0.39 (btw, that’s about ¼ the price of the rubbish they serve up in certain leading UK supermarkets) 

But the BEST PdNs in the country—in places like Fabrica de Nata and Manteigaria (which roasts its own, excellent coffee beans)—are around €1.

This means we have to get really good at training our taste buds, mouth, nose, and eyes to perceive what a great PdN really looks, smells, feels, and tastes like.

Now, flip this around and imagine you’re the café or bakery (pastelaria) providing this tasty treat.

If you’re a Manteigaria-level producer and can’t differentiate on price, what can you do?  

Decide Who YOU Want to Serve

Not every customer is created equal.

If you expect to sell to anyone with a pulse and a purse, guess what?

That’s exactly who you’ll attract - ‘anyone’.

But there’s a better way.

You know the old sales expression, “Sell the sizzle, not the steak”?

When you get good at this but figure out how to wrap it in an ethical delivery mechanism, you amplify what your discerning customer expects, attracting those who wish to become more discerning.

And so, you sell your tongue-meltingly good PdNs to those who ‘know’, and you educate those who wish to know. And everyone else… the passing tourists who want to pay OTT for some lump of moist cardboard tossed in cinnamon?

They’re fodder for someone else, but your job is to repel them. Because - trust me - you don’t want their money. They’ll denigrate your product without understanding what they’re tasting, using price and location as their basic metrics rather than everything that makes a PdN spectacularly good.  

And if you’re not expensive, you can’t be as good, right?

Sheesh!

Like I said, this is not your customer. You don’t need that kind of brain damage.

Our job is to attract, educate & delight the right kind of people.

Our people.

Which means you need to know who they are when they walk in.

So the question becomes, do you?

The Mouth Wants What The Mouth Wants!

I was at Porto airport the other morning, on my way to Rome, when I noticed the price of PdNs at the various cafés and watering holes on the way. As expected, the quality varied (a lot), but what was most striking was the average price—€2.20.

Here, we have a beautiful example of price elasticity - how far we can stre-e-e-etch the price before all parts of the market say ‘Nope, I’m out!’.

Clearly, as this is an airport, it is well tested against what the average tourist spot will charge, and sure enough, PdNs run from €1.40 to €2.50 at Porto airport.

What does this tell us? Two things.

1. I’m at the airport, and I want a PdN - a really, really good one. If the average price is 2x what I’m used to, I might not be happy paying that, but I’m still going to have to buy one if my desire is greater than my aversion to spending 2x what it costs on my local High Street because I’m not there, I’m here at the airport.

2. The price is automatically framed for the customer. ‘Top end’ is €2.50 and ‘cheap’ is €1.40. So, if you’re selling at €1.00 on the High Street to an open crowd, you can sell at €1.50 here - fully 50% more - and still seem ‘cheap’.

Now, the reality is that you have this ability in your market already, but you are a little, or perhaps a lot, scared of trying to shift your pricing. You think that you’ll be seen as ‘too expensive’.

You feel your customers will hate you for trying to take their eyes out by adding a meagre 30% to your pricing (even after your costs have risen by 50%)

You break out in a cold sweat at the slightest hint of a thought that you could lose ALL your clients if you stuck a tiny 15% on everything you do. 

Fear. The mother of all inertia and failure.

How do we overcome the impact of fear?

Courage, that most admirable of human characteristics.

And here, the humble Pastel de Nata has much to teach us.

If we just tweak our prices a little while simultaneously educating our customers on the difference between what we offer them and what they can expect elsewhere, the right ones, those who are ‘our people’, begin to see and feel that what we offer really isn’t the same experience as others would have them believe and we begin to gather evidence that we can charge more and be seen as more valuable, useful, better.

Because evidence builds confidence, we gradually widen and expand our circle of comfort, and what was once unfamiliar and scary now becomes familiar and routine.

So, step by step, little by little, we increase our prices, expand our differentiators, refine our messaging, grow our confidence, and soon, we’ve added 30… 50… 100%+ to our pricing and lost not a single client.

If you’d like to know more about how this thinking and the other pricing mechanics can help you work less and earn more (as in, your business achieves more with less of you), come and chat.

You can reach me via any of the mechanisms/contact info below.

To your inevitable success.

Dino Tartaglia is a former Electronics Engineer, now a businessman, mentor, coach and troubleshooter working to help you, if you’re a coach, consultant, creative or service provider, to Build a Joyful, Dependable Business around Being Brilliant at What You Do. 

In his own coaching, and together with world-class coach Simon Hartley, the other half of Success Engineers (their joint business), he helps you to improve your thinking to ask better questions, so that you solve the right problems in your business at the right time, develop your own personal performance as a business owner and get closer to What Matters Most. 

You can find Dino in our FB Group , on his  website or on any of these other locations; Facebook | LinkedIn | Twitter | Instagram |PodCast - Back Bedroom to Big Business