Pricing Strategy
Why Price Matters to the Models
Section titled “Why Price Matters to the Models”Price isn’t just revenue per head. It determines which customers you attract and how far they’ll travel.
Price Bands for Sheung Wan
Section titled “Price Bands for Sheung Wan”| Band | Per Head | Target Segment | Distance Tolerance |
|---|---|---|---|
| Budget | HKD 30-50 | Elderly locals, students | 200m max (exponential decay) |
| Mid-range | HKD 60-90 | Office workers, young professionals | 400m (power β=2.0) |
| Premium | HKD 100-200 | Expats, date night, client meals | 800m+ (power β=1.2) |
| High-end | HKD 200+ | Destination diners | 2km+ (reputation-driven) |
The Rent Constraint
Section titled “The Rent Constraint”At 14 Wa In Fong East, estimated rent: HKD 35,000-45,000/month (see Property).
| Price Band | Avg Spend | Covers Needed/Day | Feasibility |
|---|---|---|---|
| Budget (HKD 40) | HKD 40 | ~33 | ❌ Impossible in 400 sq ft |
| Mid-range (HKD 80) | HKD 80 | ~17 | ⚠️ Tight but possible |
| Premium (HKD 150) | HKD 150 | ~9 | ✅ Achievable with differentiation |
How It Changes the Models
Section titled “How It Changes the Models”- Huff Model: Price affects Sj (attractiveness). Underpricing in a premium area wastes potential; overpricing in a budget area kills traffic
- Gravity Model: Price filters Oi (origin mass). Only population segments that can afford your price contribute to flow
- Agent Simulation: Each agent has a budget ceiling. Ah Ming won’t pay HKD 80. Tom Watts won’t eat at HKD 40 places