300 calories: one cent
December 19, 2011 6:23 AM Subscribe
Can you help me understand this pricing strategy at Coldstone Creamery? The medium size ice cream was only 1 cent more than the small.
The large was 20 cents more again (which makes sense). I understand the reasoning behind relatively small step increases in size prices (the small increase drives people toward the larger size, and since the overhead is basically the same, the increase, while small, is close to pure profit), but that doesn't really seem to make sense for an increase as small as one cent. Is there something I'm missing? Is it just a way to increase perceived value for overpriced ice cream?
The large was 20 cents more again (which makes sense). I understand the reasoning behind relatively small step increases in size prices (the small increase drives people toward the larger size, and since the overhead is basically the same, the increase, while small, is close to pure profit), but that doesn't really seem to make sense for an increase as small as one cent. Is there something I'm missing? Is it just a way to increase perceived value for overpriced ice cream?
If you perceive an entity as 'generous' you will prefer that entity. So much the better if you feel that generosity is directed at you.
Combined with the fact that eating releases pleasant nuero chemicals, so eating more 'feels' better (never mind how your stomach and bloodstream and arteries feel).
Roll in the pervasive corporate 'eat more' messages and the general westernized inability to recognize satiation, instead relying on empty containers as cues to meal completion.
You're right that the ice cream is not their biggest expenditure. So they have to keep the generalized you coming back, and if the songs won't do it, the enormous portions might.
I've only been to a coldstone once and I had to try three flavors before deciding it was all too foul to eat, so I don't understand the place at all.
(there's also some consumer psychology at play here about buying the second least expensive item in a set, so as not to appear stingy. I'm too tired to adequately connect that up, but with access to an academic library articles could be hunted down.)
posted by bilabial at 6:35 AM on December 19, 2011 [1 favorite]
Combined with the fact that eating releases pleasant nuero chemicals, so eating more 'feels' better (never mind how your stomach and bloodstream and arteries feel).
Roll in the pervasive corporate 'eat more' messages and the general westernized inability to recognize satiation, instead relying on empty containers as cues to meal completion.
You're right that the ice cream is not their biggest expenditure. So they have to keep the generalized you coming back, and if the songs won't do it, the enormous portions might.
I've only been to a coldstone once and I had to try three flavors before deciding it was all too foul to eat, so I don't understand the place at all.
(there's also some consumer psychology at play here about buying the second least expensive item in a set, so as not to appear stingy. I'm too tired to adequately connect that up, but with access to an academic library articles could be hunted down.)
posted by bilabial at 6:35 AM on December 19, 2011 [1 favorite]
Last time I looked, in Boston the prices for the "Originals" were:
6oz - $5.00, 10oz - $5.50, 14oz - $6.05
And the "Make your own" base price was:
6oz - $3.85, 10oz - $4.25, 14oz - $4.75
So it sounds like you're getting a deal where you are.
posted by FreezBoy at 6:35 AM on December 19, 2011
6oz - $5.00, 10oz - $5.50, 14oz - $6.05
And the "Make your own" base price was:
6oz - $3.85, 10oz - $4.25, 14oz - $4.75
So it sounds like you're getting a deal where you are.
posted by FreezBoy at 6:35 AM on December 19, 2011
Oh, the staff mocked me for choosing the smaller size!!!!
I had forgotten that. They definitely have a preference for getting you to aim for the middle. I bed it has something to do with the habits of mixing the 'stuff' in. Harder to keep the muscle memory precise for three different sizes and keep quality high?
That, right there? Is a guess based on what I know about moving through a work space and portioning, but I couldn't point to a single article that would back it up. And now I'm curious to be a fly on the wall at a coldstone staff meeting or corporate event.
posted by bilabial at 6:39 AM on December 19, 2011
I had forgotten that. They definitely have a preference for getting you to aim for the middle. I bed it has something to do with the habits of mixing the 'stuff' in. Harder to keep the muscle memory precise for three different sizes and keep quality high?
That, right there? Is a guess based on what I know about moving through a work space and portioning, but I couldn't point to a single article that would back it up. And now I'm curious to be a fly on the wall at a coldstone staff meeting or corporate event.
posted by bilabial at 6:39 AM on December 19, 2011
Basically it means there's so much markup on the cone that the amount they give you doesn't really matter.
posted by empath at 6:40 AM on December 19, 2011
posted by empath at 6:40 AM on December 19, 2011
Response by poster: Basically it means there's so much markup on the cone that the amount they give you doesn't really matter.
Well, yes, but I think this is a given.
They have found, however, that some people do not want so much ice cream, so they are forced to offer a smaller size to accommodate those customers, but cannot afford to drop the price accordingly.
This strikes me as very right. I was thinking of it in the opposite way, with the small as the floor (or base model), and going up from there. I had never considered that the medium was the floor and the price for the small constituted a premium.
posted by OmieWise at 6:46 AM on December 19, 2011
Well, yes, but I think this is a given.
They have found, however, that some people do not want so much ice cream, so they are forced to offer a smaller size to accommodate those customers, but cannot afford to drop the price accordingly.
This strikes me as very right. I was thinking of it in the opposite way, with the small as the floor (or base model), and going up from there. I had never considered that the medium was the floor and the price for the small constituted a premium.
posted by OmieWise at 6:46 AM on December 19, 2011
Best answer: Think of it this way: They are charging a premium for purchasing the "healthiest" size. There is a large class of customers who like their desserts, but aren't able to exercise their own portion control and are willing to pay a premium to have it done for them. For example, 100 calorie snack packs are considerably more expensive per ounce than just buying a box of them and measuring it out yourself. People love their 100 calorie snack packs.
I'd go as far to hypothesize and say if they made an even smaller size called the "mini", and they charged the same price as the small, it would receive healthy sales as well. In fact, I think the mini would sell more than the small, since it is the new smallest size, and the "value" conscious person will purchase the medium.
posted by AaRdVarK at 6:46 AM on December 19, 2011 [6 favorites]
I'd go as far to hypothesize and say if they made an even smaller size called the "mini", and they charged the same price as the small, it would receive healthy sales as well. In fact, I think the mini would sell more than the small, since it is the new smallest size, and the "value" conscious person will purchase the medium.
posted by AaRdVarK at 6:46 AM on December 19, 2011 [6 favorites]
They are charging a premium for purchasing the "healthiest" size. There is a large class of customers who like their desserts, but aren't able to exercise their own portion control and are willing to pay a premium to have it done for them.
I agree that this a way of getting customers to pay a premium for the healthiest size. I always order the smallest size of ice cream possible, usually the kiddie size. This is not, though, because I am incapable of exercising portion control, but because it would be a shame to waste so much ice cream, when I don't want it.
posted by peacheater at 7:05 AM on December 19, 2011 [5 favorites]
I agree that this a way of getting customers to pay a premium for the healthiest size. I always order the smallest size of ice cream possible, usually the kiddie size. This is not, though, because I am incapable of exercising portion control, but because it would be a shame to waste so much ice cream, when I don't want it.
posted by peacheater at 7:05 AM on December 19, 2011 [5 favorites]
You're assuming that the small size quantity to price ratio is financially ideal to the company and the the small's price is the minimum they can charge to make a profit when in fact it's the medium size that they have their pricing structure based on.
Basically you're still paying for a medium (1 cent less) but actually getting small.
Hope that make sense (it does in my head)
posted by eatcake at 7:08 AM on December 19, 2011
Basically you're still paying for a medium (1 cent less) but actually getting small.
Hope that make sense (it does in my head)
posted by eatcake at 7:08 AM on December 19, 2011
So it sounds like you're getting a deal where you are.
Yes, this sounds like a local franchise owner "not getting it" and just pricing stuff randomly. Probably starting from the corporate guidelines of a fifty cent difference, and ending up at nonsense. A one cent price differential isn't going to drive anyone's purchasing.
posted by smackfu at 7:58 AM on December 19, 2011 [1 favorite]
Yes, this sounds like a local franchise owner "not getting it" and just pricing stuff randomly. Probably starting from the corporate guidelines of a fifty cent difference, and ending up at nonsense. A one cent price differential isn't going to drive anyone's purchasing.
posted by smackfu at 7:58 AM on December 19, 2011 [1 favorite]
This is not, though, because I am incapable of exercising portion control, but because it would be a shame to waste so much ice cream, when I don't want it.
Exactly. The smaller size doesn't cost MORE, therefore there is no benefit to purchasing the medium and then "practicing portion control." No need. Just purchase the size you're going to eat.
posted by peep at 9:52 AM on December 19, 2011
Exactly. The smaller size doesn't cost MORE, therefore there is no benefit to purchasing the medium and then "practicing portion control." No need. Just purchase the size you're going to eat.
posted by peep at 9:52 AM on December 19, 2011
Just as a comparison, McDoald's (at least locally) charges $1 for any size soft drink. Coupled with the fact that in-dining room refills are free, the assumption is that the cost of the product per-person is pretty negligable.
Our local Coldstone does not follow the same pricing model as yours. The penny difference is unusual (even 10 to 25 cents would seem more rational), so maybe there's not even a good "reason" behind this. Also, you don't say where the prices start. Only 20 cents more for a large is also not that much of a jump, but if the lowest price is relatively high, then maybe it's all about "perceived value."
posted by The Deej at 10:00 AM on December 19, 2011
Our local Coldstone does not follow the same pricing model as yours. The penny difference is unusual (even 10 to 25 cents would seem more rational), so maybe there's not even a good "reason" behind this. Also, you don't say where the prices start. Only 20 cents more for a large is also not that much of a jump, but if the lowest price is relatively high, then maybe it's all about "perceived value."
posted by The Deej at 10:00 AM on December 19, 2011
I assume it's to get you to buy more add-ins. If you're getting more ice cream base for no money, hey, why not indulge in that extra sauce beyond the three that come with it? Maybe the cost margin between the small and medium is 25 cents but by pricing it low many people indulge in an extra 75 cent add in because they "can."
posted by itsonreserve at 10:35 AM on December 19, 2011
posted by itsonreserve at 10:35 AM on December 19, 2011
As indicated, the ice cream is not the determiner of price, the labor is. It costs nearly the same to produce a small or medium, therefore they want to discourage the cheaper item.
posted by blue_beetle at 3:48 PM on December 19, 2011
posted by blue_beetle at 3:48 PM on December 19, 2011
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