Marketing Mix: Price

Current and future pricing

As discussed earlier, Ambro’s current price for one package is 79€ (including international shipping). For two packages, customers pay 119€ during the pre-sales phase. With one package, you are able to make 7.5 full meals or 15 breakfasts, making one full meal cost 10.53€ or 7.93€, respectively.

A non-negligible part of the price is caused by international shipping costs, which are quite expensive. In order to cut these costs and to offer smaller, easier-to-use packages to consumers, one of Ambro’s short-term goals should be to find local production partners. Thereby, they will be able to offer the product on a much lower price. Our estimate for this new price is 50€ per package, making one meal cost 6,67€.

Comparison with substitutes

Soylent, which we view as the closest available substitute for Ambro, is much cheaper. “A week’s worth” (21 meals) package costs about 48€ ($65), resulting in a price of 2.29€ per meal. This means that Ambro, even considering the new estimated price for the US, is more than double the price of Soylent. However, one needs to keep in mind that Soylent is no direct competitor; a significant difference to Ambro is that Soylent is not organic.

A price comparison to other substitutes, such as easy-to-take along snacks, seems rather difficult. They might be cheaper but their nutritional value may, even if they are combined to form a full meal, stay a lot lower than Ambro’s. Rather, we compare Ambro to the popular U.S. meal substituting dietary shakes. If we plot Ambro against these competitors in a Price / Organic quality matrix (and against the U.S. averages) we see the following:

First a short explanation. The official definition of organic products is: a labeling term that refers to an agricultural product produced in accordance with the regulations of the National Organic Program in the United States. This mainly refers to the production process. Organic products become more and more prevalent in United States supermarkets. Both Soylent and IdealShape are products which are cheap and rely heavily on the use of chemicals and therefore not organic. The price is based on US averages and the average of one meal over the whole product range of the different brands.

When we want to compare these products it is important to note that they all serve a different industry, IdealShape is focused on dietary products and although Ambro and Soylent will be most likely labeled to this segment by the FDA, they are no dietary  products, but rather serve different needs as discussed before. As can be seen, Ambro is priced rather premium, but is still cheaper than a regular U.S. meal. Considering the fact that most organic meals are more expensive than regular ones, we could safely state that Ambro is a relatively cheap meal substitution.

Why premium pricing?

As mentioned before, Ambro is following a Blue Ocean Strategy by creating a new market. Ambro will be the first healthy meal substitute. As a first mover, the company can set the price without heavily considering competitors' prices. However, not only competitors but also substitutes must be taken into account; compared to substitutes, Ambro is offered at a premium price.

This pricing strategy can be justified by the following reasons:

• Ambro's main target group are high-income earners
• Ambro is a high-quality convenience product
• The organic food category is supposed to continue to grow; people are willing to pay more for healthy, organic food