An $8 latte may be coming to a local independent coffeehouse near you — perhaps it already exists in some places. If you’re a retailer grappling with the Square fee increase, I have some tips here that may help you think through the quandary you are in. In the process, I’m also going to state the case for an $8 latte ☕️
Some of you may be gasping already. What? An $8 latte!! Is she nuts? Full disclosure here… I own a specialty coffee bar and believe it or not we already have a hugely popular seasonal latte with all the fancy fixin’s that is already almost $7. Tack on alternative milk, and we are definitely over $8. People buy it because it is that good!
So maybe a plain & simple latte with just espresso and regular milk won’t be costing $8 in the near future, but my point is 👉 prices will be going up. Oh yes, they will! So we should all get ready to pay a little bit more.
Square fees on the rise
Here is a big reason why. Recently, Square, one of the most popular iPad point of sale systems, dropped the proverbial bomb on its 2 million merchants that its merchant fee structure was changing — just in time for the holidays! The end result is that many small businesses will be paying several thousand dollars more per year in fees, and people are freaking out!
Understandably, this shake-up is causing merchants to compare notes, examine alternatives and re-consider their cost and pricing structures. Many of them are really angry; feeling betrayed by a company that has grown up by promising a simple, straight-forward fee structure to small business. Square, in fact, empowered many of these small merchants to start their businesses in the first place.
As with all things, once the dust settles and emotions level out, we can hopefully arrive at a place where we can see the bigger picture. The reality is that Square has never recorded a profitable year since it began in 2010. Far from it! Yearly losses amount to hundreds of MILLIONS. How many small businesses could sustain huge losses each and every year? It wouldn’t be sustainable for us, and it’s surely not sustainable for Square.
It’s hard to say whether the losses have come about from poor management or decision-making, not focusing on its core product, rapid growth, or a combination of all of these. Regardless, Square is simply doing what it must to survive and so must we!
What’s a small business to do?
So here are a few thoughts on how a small business can respond to the Square shake-up:
- Feel the anger but do NOT embrace a victim mentality.
Small business owners are a resilient bunch! Play to your strengths and realize you can pivot quickly and adjust. Don’t waste a ton of time bitching about how everybody is just out to screw you. It’s business, baby!! Nothing is guaranteed.
- Do your due diligence to determine your best course of action.
Each business is different so it makes sense to examine how yours utilizes the app. Are you simply using POS or also features like Marketing, Loyalty, and Payroll? Only then can you compare with what other providers are offering and see if it makes sense for you to make a change.
- Don’t be afraid to raise prices!
We are spoiled in America! We want organic, sustainable, fair-trade, handmade, socially-conscious products made by people who are earning a living wage with full benefits. And then we want to pay dollar store prices. Something not adding up? When expenses go up you can do a couple things: Respond with other cost-cutting measures and/or increase prices. Especially if you’re quality-focused, raising prices is necessary at some point to remain sustainable.
Let’s all hope Square can turn the corner and become sustainable because if it can’t, I have a feeling that the fallout will be so much worse, but we’ll leave that for history to determine.
Now back to that $8 latte…
Let’s be honest for a moment. We routinely and gladly pay $8-10 for a glass of wine at a restaurant. Coffee is like wine in that it is a fruit that needs to be harvested and processed by many hands before landing in your cup. Coffee roasters and baristas train and practice many hours to become skilled at their craft. Beyond just satisfying your tastebuds, when you visit your local coffee shop, you’re not just stimulating the local economy. You are supporting an industry that extends globally.
I guarantee you that a quality, hand-crafted latte is one of the last affordable culinary luxuries… even at $8! We should all be lining up.