Many InVine clients are saving precious time by using our Smart Profit feature for beverage pricing. We know it sounds daunting to give up on that carefully built spreadsheet, with dozens of columns and thousands of formulas, but trust us, it’s possible to do all that, and more, in a fraction of time.
Log on to your InVine account and click on the Intelligence option.
You’ll see a brief description of how Smart Profit works and a button to enable it. Don’t worry, nothing really happens when you turn it on, Smart Profit still needs to be activated for each individual product, later on.
An important side note: even if you’ve been using Smart Profit for a while, as a security feature you can always deactivate it. You’ll be able to revert back to the manual prices that existed before SP.
Now here’s how it works.
The Basics: Baseline Rule
Start by defining a baseline rule.
The baseline rule will be the default rule. It is applied whenever a product doesn’t match the targeting criteria of any other rules. This should be the most common pricing rule on your list.
When you set the baseline rule (or any other rule for the matter) you have the option to select one of 3 ways to price a product based on cost (let’s assume cost is $10 per bottle for these examples):
- A multiplier markup (i.e. a 3x multiplier will price the item at $30)
- A percent markup (i.e. a 200% markup will price the item at $30)
- A fixed dollar amount (i.e. a $20 markup will price the item at $30)
Using the same formulas above, but on a wine that costs $20 per bottle, will yield the following prices:
- 3x multiplier markup: price is $60
- 200% markup: price is $60
- $20 fixed markup: price is $40
Most restaurants prefer the multiplier or percentage markup options.
Advanced Options: Additional Rules
Now that you’ve set this markup, it’s time to be picky and really customize your profit generation. Let’s say it’s summer time and you want to price up your sparkling selection.
The steps are:
Under additional rules click the + Add a new rule button to create a new one
Define which products should this rule target
Define the markup settings you wish to apply for this rule
Also, if you have several rules that apply to the same product, the Auto / Manual setting will allow you to choose one of two ways to apply them:
- Auto: use rule that maximizes profit
- Manual: top rules will prevail over bottom rules
How does this all come together?
Next time you add a new product, or when you activate the Smart Profit feature for one of your existing products, InVine will do the entire math for you and calculate the price. Together with PoS integration, InVine can help you reduce the time it takes to manage your beverage program down to zero! Reach out to us and tell us how you use Smart Profit!
To get started, make sure that most products (or at least the ones that give you the most headaches) have their unitary cost / frontline cost typed in. Feel free to reach out to one of our Customer Success Managers if you’d like us to batch import a spreadsheet with these figures.
Note on Frontline cost: You can activate Frontline cost at the Backoffice settings. This allows you to manage your specific cost (which may include volume discounts) and the Frontline cost. For every product with both cost and Frontline cost typed in, the Smart Profit algorithm will always use Frontline cost for its calculations of markup and margin.