Popular coffee houses know how to make their customers pay and want them to choose specific products. How do they do it? – the pricing strategy at its best!
Not being an avid drinker of espresso, I ordered it while having a chat with my friend at one of the tables of CCD store in my city (since the chat was supposed to be work-related and hence concise, I tried to save money). Those who don’t know what it is – it’s 30 ml of grounded coffee beans and boiled water together (high in caffeine levels). After a tough round of brainstorming I could not help but get annoyed at the price; it was only a few bucks less than a cappuccino which costs significantly more to produce.
Thereafter I browsed zomato for espresso costs in the three of the most popular coffee houses in the nation – Starbucks, CCD and Barista and found that espresso shots cost significantly high so as to deter non-espresso drinkers from venturing to buy one. At Barista, it costs as much as the cappuccino!
Starbucks provides most of its coffees in four different sizes – the flat white espresso comes in short (costing 190), tall (costing 215), grande (240) and venti (265). Most outlets would reduce or increase the absolute price a customer pays when he buys more of the product but Starbucks doesn’t. It charges the same absolute price i.e. 25 when you grab a bigger coffee (for every drink). What does this mean?
The logic lies in what type of a product is coffee. It is not like pizza – if you go as a group you can order a large one and share. Everyone prefers his own cup and exactly the size they prefer – everybody has a certain capacity to intake caffeine and thus different prices for different sizes would not affect decision. Therefore, the best Starbucks can do is to charge the same absolute price for movement to bigger sizes.
A significant tool that these shops use to figure which consumers can more for their coffee is charging a higher price for a relatively cheap service. For instance a cappuccino costs 99 and a hazelnut cappuccino costs 119; an increase worth 20 is not usually the scene on the cost side. Usually an add-on such as chocolate syrup or another flavour is added for consumers who are vulnerable towards paying more for a slight improvisation of their drink – they are‘willing and able’ to pay more.
And the worst part is that coffee-lovers are usually ‘coffee-lovers’ – they can’t wish for even a slightly inferior drink since all they care about is the steamy brew to savour the evening that brings a nice person or a book to chat with.