An analysis of the pricing methods in a butcher shop : a case study

Abstract

Purpose: The purpose for this study is to identify micro business characteristics particularly in relation to pricing in a butcher business, while enabling the formulation of a set of objectives and ensuring consistency throughout the research. Design: The dissertation takes a case study approach carried out in a typical Maltese butcher. A number of interviews were also conducted with some other sources including butcher shops and suppliers in order to compliment the findings from the case study. Findings: Product costs and expenses were identified as very important in conjunction with customer perceived value and competition in setting prices. This suggests that the owner-manager must be experienced, understand his clients and continuously aware of what his competitors are doing. Furthermore, the cost-plus mark-up pricing is used as the basis for price setting with flexible mark-ups that vary from one product to another according to what the owner-manager believes is appropriate. Other factors such as economic and social aspects amongst others have a bearing on the final price. Conclusions: The case study butcher does not apply management accounting formally but in a haphazard manner. However, management accounting is applied indirectly through simple calculations for costing and pricing the products. Furthermore, the behaviour of the owner-manager depends on the circumstances and consequently the solutions may vary from one situation to another according to what the owner-manager believes is best for the business. Value: A number of recommendations were formulated to assist the case study butcher in improving his business and increasing the probability of success.