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The price jump from $1 to $2 feels exploitive, even if it's not. Even removing the surprise element, 100% is too big of a price jump for any product to make. Yo

The price jump from $1 to $2 feels exploitive, even if it's not. Even removing the surprise element, 100% is too big of a price jump for any product to make. You could correct for the surprise aspect, but the change itself is still problematic. Communicating the change ahead of time (given it's popularity and cost difference) would be the most prudent. But in the end, I think they actually found a better approach: for regulars, the coffee is often free. Because they also bought other things, and helped reinforce the customer community and predictable revenue. In services, grandfathering is a great way to rollout changes to pricing. But it doesn't work for companies with very little growth/where everyone is a regular.

SoftTalker 2y ago
For something like that, any price change is going to be a nuisance. Any jump less than another whole dollar now means you have to deal with change. I usually have some cash on me but I go out of my way to not carry a pocketful of coins. Yet jumping to $2 is a 100% increase and that feels like a lot. Probably better to stay with $1 and just treat it as a loss leader that gets customers coming back. See for example the $1.50 Hot Dog combo at Costco, which has stayed at that price for decades. They aren't making any money on it but customers have come to appreciate it and it nurtures loyalty.
- xethos 2y ago
  > [Costco] aren't making any money on it Perhaps not the point you were trying to make, but they almost certainly are. Per the cofounder and (in 2018), CEO, Craig Jelenik: > we [Costco] took it over and started manufacturing our hot dogs. We keep it at $1.50 and make enough money to get a fair return. https://www.snopes.com/fact-check/costco-founder-kill-hotdogs/ https://www.snopes.com/fact-check/costco-founder-kill-hotdog...
  - SoftTalker 2y ago
    OK. Hot dog, bun, drink cup, and soft drink. Straws, napkins, plate or paper wrap, condiments. Labor to serve the customers, and clean up after them. Floor space taken up by the eating area. Cost of storing the raw ingredients, and the kitchen equipment to prepare the food. I'll grant it's possible they are making a profit, but note he doesn't say they are making a profit, he says they are making a "fair return." They could be losing money. Either way, in the scope of their store operations, it's not consequential on that basis. They do it to make customers happy. It generates good will. That is the "fair return."

SoftTalker 2y ago

For something like that, any price change is going to be a nuisance. Any jump less than another whole dollar now means you have to deal with change. I usually have some cash on me but I go out of my way to not carry a pocketful of coins. Yet jumping to $2 is a 100% increase and that feels like a lot. Probably better to stay with $1 and just treat it as a loss leader that gets customers coming back. See for example the $1.50 Hot Dog combo at Costco, which has stayed at that price for decades. They aren't making any money on it but customers have come to appreciate it and it nurtures loyalty.

xethos 2y ago
> [Costco] aren't making any money on it Perhaps not the point you were trying to make, but they almost certainly are. Per the cofounder and (in 2018), CEO, Craig Jelenik: > we [Costco] took it over and started manufacturing our hot dogs. We keep it at $1.50 and make enough money to get a fair return. https://www.snopes.com/fact-check/costco-founder-kill-hotdogs/ https://www.snopes.com/fact-check/costco-founder-kill-hotdog...
- SoftTalker 2y ago
  OK. Hot dog, bun, drink cup, and soft drink. Straws, napkins, plate or paper wrap, condiments. Labor to serve the customers, and clean up after them. Floor space taken up by the eating area. Cost of storing the raw ingredients, and the kitchen equipment to prepare the food. I'll grant it's possible they are making a profit, but note he doesn't say they are making a profit, he says they are making a "fair return." They could be losing money. Either way, in the scope of their store operations, it's not consequential on that basis. They do it to make customers happy. It generates good will. That is the "fair return."