7 ms·

The Fixed Price of Coca-Cola from 1886 to 1959

103 points by dpflan 11y ago

dpflan 11y ago
Inspired by this Planet Money episode: http://www.npr.org/sections/money/2012/11/15/165143816/why-coke-cost-a-nickel-for-70-years http://www.npr.org/sections/money/2012/11/15/165143816/why-c...
- percept 11y ago
  "Levy says the folks at Coca-Cola thought about converting the vending machines to take a dime. But doubling the price was too much. They wanted something in between. So they asked the U.S. Treasury to issue a 7.5-cent coin."
  - Nicholas_C 11y ago
    >In another attempt, The Coca-Cola Company briefly implemented a strategy where one in every nine vending machine bottles was empty. That is an absurd strategy.
    - jedberg 11y ago
      Today they would call that "Growth Hacking". :)
    - pageld 11y ago
      According to the planet money episode, Coke never actually implemented it. They just discussed the merits of it and if it would actually work.
    - pjc50 11y ago
      Works for Valve and their crates ..
    - kbenson 11y ago
      I wonder if they eventually would have run afoul of gambling laws.
- cbr 11y ago
  And even more so by Levy and Young's 2004 paper: http://www.biu.ac.il/soc/ec/d_levy/publications/jmcb4.pdf http://www.biu.ac.il/soc/ec/d_levy/publications/jmcb4.pdf
hapless 11y ago
Here is the original paper, un-mediated by wikipedia. http://www.biu.ac.il/soc/ec/d_levy/publications/jmcb4.pdf http://www.biu.ac.il/soc/ec/d_levy/publications/jmcb4.pdf
carlesfe 11y ago
This story is so interesting! - Lawyers screwing up the Coca-Cola founder on bottling - Founder strikes back by advertising low bottled prices - Price stable for 30 years - They then try to raise price to 6c - Company discovers that 1-coin pricing boosts sales - President tries to convince the US Treasury to mint a 7.5c coin (?!?!?) - Company using alternative strategies to bring the price up like placing empty bottles that some customer has to pay for - Finally Coca-Cola, company who owns like 80% of vending machines, basically invents a method to reliably deliver change on machines. Overall, I found it a surprisingly "canonical" story on how startup founders face adversities, how they try to lobby the government, screw up customers, and finally reach a creative solution based on technology that establishes their product!
- jedberg 11y ago
  > President tries to convince the US Treasury to mint a 7.5c coin (?!?!?) It was because at the time vending machines couldn't make change, and they wanted to raise the price, but doubling (from 5 to 10 cents) would be too much. Instead they figured out how to make the vending machine make change.
  - carlesfe 11y ago
    Yes, the exclamation marks were more in the line of "WTF". However I need to give credit to them for trying a ... creative... solution
  - Animats 11y ago
    Yes, and there lies the interesting story of National Rejectors, Inc., which for decades had a monopoly on fake coin detectors.[1] Even today, most vending machine coin mechanisms are clones of that design. In a mechanical unit about 4 inches square and an inch thick, coins are tested for size, holes, weight, resiliency, electrical conductivity, and magnetic properties. It's an elegant bit of engineering. [1] http://rwatts.cdyn.com/download/slug%20rejectors/national%20slug%20rejectors.pdf http://rwatts.cdyn.com/download/slug%20rejectors/national%20...
    - 11y ago
7Z7 11y ago
Attempts to raise prices The Coca-Cola Company sought ways to increase their prices, even approaching the U.S. Treasury Department in 1953 to ask that they mint a 7.5 cent coin.[1] The Treasury was unsympathetic. In another attempt, The Coca-Cola Company briefly implemented a strategy where one in every nine vending machine bottles was empty.[1] The empty bottle was called an "official blank".[2] This meant that, while most nickels inserted in a vending machine would yield cold drinks, one in eight patrons would have to insert two nickels in order to get a bottle. This effectively raised the price to 5.625 cents.[1] Coca-Cola never implemented this strategy on a national scale.
cryptoz 11y ago
Previous discussions: https://news.ycombinator.com/item?id=4788659 https://news.ycombinator.com/item?id=4788659 https://news.ycombinator.com/item?id=9796275 https://news.ycombinator.com/item?id=9796275
cbr 11y ago
[they] briefly implemented a strategy where one in every nine vending machine bottles was empty ... this effectively raised the price to 5.625 cents. Instead, charge $0.10 but 44% of the time you get your dime back along with the bottle. Effective price is the same 5.6 cents, but people are excited to get free bottles instead of mad and disappointed. (This might be illegal, since, it's a lot like gambling, but both versions should be equally illegal.)
- garth5689 11y ago
  The problem was that the vending machines were not set up to take dimes at the time. http://www.npr.org/sections/money/2012/11/15/165143816/why-coke-cost-a-nickel-for-70-years http://www.npr.org/sections/money/2012/11/15/165143816/why-c...
  - cbr 11y ago
    They were willing to lobby for a 7.5 cent coin and update their machines to recognize that, so it sounds like they could have handled dimes. The reason they didn't want to switch to dimes is that it was too big of a price jump.
    - ghaff 11y ago
      I'm curious how they eventually handled the changeover. I seem to vaguely recall Cokes when they were a dime (in the mid-sixties or thereabouts) in the machine. I also don't ever recall vending machines taking pennies or giving change in pennies--though perhaps they did. I just also have some trouble believing that Coke vending machines pretty much doubled in price over a few years.
      - Wingman4l7 11y ago
        I don't think vending machines even now will give pennies in change.
readams 11y ago
I love the idea of the blanks in the machine! It's an impressively awful idea. The problem of enraging your customers is obvious of course, but an even bigger issue would be if people could predict when the blanks would appear. They'd have to randomize them. But then you might get several blanks in a row. But you could still count the total number of blanks in a particular machine like counting cards at blackjack and buy only when opportune. So you'd need to randomize them nationally. But then you'll get machines that are entirely empty and dispense only blanks on any given load!
- theseatoms 11y ago
  > ... an even bigger issue would be if people could predict when the blanks would appear. Recall that old-fashioned vending machines typically did not have the see-though, glass front panel.
  - readams 11y ago
    I just meant that if they do the obvious thing and load every ninth slot as a blank, customers will know when it's safe to buy by watching other customers. Nobody would want to be the first!
- _kst_ 11y ago
  You could randomize them subject to the constraint that you never have two blanks in a row. That probably would have been the responsibility of the person who loads the bottles into the machine. Even so, I agree that it's an impressively awful idea. A lot of customers would have been kids who only had one nickel.
conductr 11y ago
NPR: Planet Money has a good podcast on this topic

103 points by dpflan 11y ago

Inspired by this Planet Money episode: http://www.npr.org/sections/money/2012/11/15/165143816/why-coke-cost-a-nickel-for-70-years http://www.npr.org/sections/money/2012/11/15/165143816/why-c...

percept 11y ago
"Levy says the folks at Coca-Cola thought about converting the vending machines to take a dime. But doubling the price was too much. They wanted something in between. So they asked the U.S. Treasury to issue a 7.5-cent coin."
- Nicholas_C 11y ago
  >In another attempt, The Coca-Cola Company briefly implemented a strategy where one in every nine vending machine bottles was empty. That is an absurd strategy.
  - jedberg 11y ago
    Today they would call that "Growth Hacking". :)
  - pageld 11y ago
    According to the planet money episode, Coke never actually implemented it. They just discussed the merits of it and if it would actually work.
  - pjc50 11y ago
    Works for Valve and their crates ..
  - kbenson 11y ago
    I wonder if they eventually would have run afoul of gambling laws.
cbr 11y ago
And even more so by Levy and Young's 2004 paper: http://www.biu.ac.il/soc/ec/d_levy/publications/jmcb4.pdf http://www.biu.ac.il/soc/ec/d_levy/publications/jmcb4.pdf

hapless 11y ago

Here is the original paper, un-mediated by wikipedia. http://www.biu.ac.il/soc/ec/d_levy/publications/jmcb4.pdf http://www.biu.ac.il/soc/ec/d_levy/publications/jmcb4.pdf

carlesfe 11y ago

This story is so interesting! - Lawyers screwing up the Coca-Cola founder on bottling - Founder strikes back by advertising low bottled prices - Price stable for 30 years - They then try to raise price to 6c - Company discovers that 1-coin pricing boosts sales - President tries to convince the US Treasury to mint a 7.5c coin (?!?!?) - Company using alternative strategies to bring the price up like placing empty bottles that some customer has to pay for - Finally Coca-Cola, company who owns like 80% of vending machines, basically invents a method to reliably deliver change on machines. Overall, I found it a surprisingly "canonical" story on how startup founders face adversities, how they try to lobby the government, screw up customers, and finally reach a creative solution based on technology that establishes their product!

jedberg 11y ago
> President tries to convince the US Treasury to mint a 7.5c coin (?!?!?) It was because at the time vending machines couldn't make change, and they wanted to raise the price, but doubling (from 5 to 10 cents) would be too much. Instead they figured out how to make the vending machine make change.
- carlesfe 11y ago
  Yes, the exclamation marks were more in the line of "WTF". However I need to give credit to them for trying a ... creative... solution
- Animats 11y ago
  Yes, and there lies the interesting story of National Rejectors, Inc., which for decades had a monopoly on fake coin detectors.[1] Even today, most vending machine coin mechanisms are clones of that design. In a mechanical unit about 4 inches square and an inch thick, coins are tested for size, holes, weight, resiliency, electrical conductivity, and magnetic properties. It's an elegant bit of engineering. [1] http://rwatts.cdyn.com/download/slug%20rejectors/national%20slug%20rejectors.pdf http://rwatts.cdyn.com/download/slug%20rejectors/national%20...
  - 11y ago

7Z7 11y ago

Attempts to raise prices The Coca-Cola Company sought ways to increase their prices, even approaching the U.S. Treasury Department in 1953 to ask that they mint a 7.5 cent coin.[1] The Treasury was unsympathetic. In another attempt, The Coca-Cola Company briefly implemented a strategy where one in every nine vending machine bottles was empty.[1] The empty bottle was called an "official blank".[2] This meant that, while most nickels inserted in a vending machine would yield cold drinks, one in eight patrons would have to insert two nickels in order to get a bottle. This effectively raised the price to 5.625 cents.[1] Coca-Cola never implemented this strategy on a national scale.

cryptoz 11y ago

Previous discussions: https://news.ycombinator.com/item?id=4788659 https://news.ycombinator.com/item?id=4788659 https://news.ycombinator.com/item?id=9796275 https://news.ycombinator.com/item?id=9796275

cbr 11y ago

[they] briefly implemented a strategy where one in every nine vending machine bottles was empty ... this effectively raised the price to 5.625 cents. Instead, charge $0.10 but 44% of the time you get your dime back along with the bottle. Effective price is the same 5.6 cents, but people are excited to get free bottles instead of mad and disappointed. (This might be illegal, since, it's a lot like gambling, but both versions should be equally illegal.)

garth5689 11y ago
The problem was that the vending machines were not set up to take dimes at the time. http://www.npr.org/sections/money/2012/11/15/165143816/why-coke-cost-a-nickel-for-70-years http://www.npr.org/sections/money/2012/11/15/165143816/why-c...
- cbr 11y ago
  They were willing to lobby for a 7.5 cent coin and update their machines to recognize that, so it sounds like they could have handled dimes. The reason they didn't want to switch to dimes is that it was too big of a price jump.
  - ghaff 11y ago
    I'm curious how they eventually handled the changeover. I seem to vaguely recall Cokes when they were a dime (in the mid-sixties or thereabouts) in the machine. I also don't ever recall vending machines taking pennies or giving change in pennies--though perhaps they did. I just also have some trouble believing that Coke vending machines pretty much doubled in price over a few years.
    - Wingman4l7 11y ago
      I don't think vending machines even now will give pennies in change.

readams 11y ago

I love the idea of the blanks in the machine! It's an impressively awful idea. The problem of enraging your customers is obvious of course, but an even bigger issue would be if people could predict when the blanks would appear. They'd have to randomize them. But then you might get several blanks in a row. But you could still count the total number of blanks in a particular machine like counting cards at blackjack and buy only when opportune. So you'd need to randomize them nationally. But then you'll get machines that are entirely empty and dispense only blanks on any given load!

theseatoms 11y ago
> ... an even bigger issue would be if people could predict when the blanks would appear. Recall that old-fashioned vending machines typically did not have the see-though, glass front panel.
- readams 11y ago
  I just meant that if they do the obvious thing and load every ninth slot as a blank, customers will know when it's safe to buy by watching other customers. Nobody would want to be the first!
_kst_ 11y ago
You could randomize them subject to the constraint that you never have two blanks in a row. That probably would have been the responsibility of the person who loads the bottles into the machine. Even so, I agree that it's an impressively awful idea. A lot of customers would have been kids who only had one nickel.

conductr 11y ago

NPR: Planet Money has a good podcast on this topic