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How Many Products Should You Sell?

Samantha Sambile, the owner of Love Batter, recently posted this question on a Facebook group:

How many items did you have in your menu when you first started out? I want make it so that I have enough items for variety and options but also want to make sure I don’t get in over my head since it’s is my first time running my own bakery business.

One mistake startups often make is offering customers too many choices. Initially this may seem backwards and unintuitive… wouldn’t you sell more if you had more to offer customers? Not necessarily.

It’s easy to get carried away with recipe variations, and when I’m running my business, I often have to remind myself that “just because you can, doesn’t mean you should”. Let’s explore some of the major downsides of offering lots of choices:

1) “The jack of all trades is the master of none”

Imagine you’re craving a really good cupcake. As you drive down the street, you see a generic bakery that sells breads, cakes, cupcakes, donuts, pretzels, etc. Then you see a cupcakery right next to it. Which one will get your business? Which one can charge more for a cupcake?

If someone wants choices, they can go to a grocery store. If someone wants the best, they can go to you!

2) Analysis Paralysis

Research has shown that the more choices someone faces, the less likely they are to make a decision. There are times when I go to a restaurant, and there are so many things on the menu that I have no idea what to choose. I might even ask the server “What do you recommend?” to help me decide!

Do your customers (and yourself) a favor by making decisions for them.

3) Bearing A Burden

It’s a lot more complicated, time-consuming, and expensive to offer lots of different products. This is especially true if you’re selling at a market: the more products you have, the longer it takes to prepare for the market and the greater the chances of having unsold inventory at the end of the day. But even if you do everything made-to-order, keeping all of the ingredients on-hand and dealing with switching costs can still be a hassle.

The Balancing Act

Of course, it’s also possible to not have enough choices. Coming to a market with only one product would probably not be a great idea. There is usually some equilibrium point where removing or adding options will decrease sales.

Generally, I think starting with fewer options is particularly important for new businesses. Some well-established ones may have the resources to be able to successfully offer many options, but many of the success stories I hear are from CFOs who find one or two things that work well, and then they hone in on those.

What Do You Think?

Do you agree that fewer choices is the way to go? Do you have any stories about making decisions for customers? Do you have any questions? I’d love to hear them in the comments below.

P.S. — That image above is from a grocery store in Chiang Mai, Thailand. I never knew so many options for cooking oil existed! Needless to say, I had no idea which one to choose.

P.P.S. — Do you have a question about the cottage food industry, entrepreneurship, marketing, venues, etc.? It just might be the inspiration for my next post! Send your question by using our contact us page — if I answer it, I’ll mention you and add a link to your website (with your permission, of course).