How Many (Star) Bucks For That Coffee?

http://blog.vendoservices.com/vendo-blog/2015/08/01/how-many-star-bucks-for-that-coffee

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Same cup of coffee, different prices. Different within cities and different from city to city. If you can charge different prices you do. Starbucks certainly does.

Why? They would lose customers with a price that’s too high. The potential customer wouldn’t buy. Or, on the other hand, Starbucks would lose money by not charging a higher price to people who would happily pay more.

It’s well known that hotels and airlines and major online retailers adjust their prices dramatically. Let’s take a look at how Starbucks does it.

In early July, 2015 they adjusted prices between 5 cents and 20 cents off their already highly adaptive pricing.

Here’s a quote from a Starbucks ex-employee on their pricing:

“Pricing varies region by region. There are certain pricing zones, even within a city, depending on the socioeconomic conditions.

For example, I worked in San Jose, California. The Starbucks just 1 mile down from me had a different pricing structure than my store because we were in different pricing zones.”

Below are average Starbucks prices within cities for a latte. Its interesting to see the average knowing that the prices range widely within each city, too. That Oslo average of $10 could mean $7 on the low end and $12 on the high end. (Personal note on that Oslo price…it’s the main reason I cancelled my summer vacation to Norway.)

Here’s another comparison. This one shows prices in Seattle and Mumbai side by side. One product, brewed coffee, gets the same price but the rest are different. Clearly demand is the key to setting these prices. Working from average income alone would be ridiculous.

Of course, it’s incredibly complicated to find the right price for each shopper. We’ve dedicated ourselves to doing just that at Vendo. And it’s not easy. It’s not a piece of lemon crumble cake. We’ve ingested thousands of cups of of coffee along the way and there are many more coffees to come. We can hear the barista shouting our names. Sebastian! Fernando! Victor! Darren! Jakob! Andrew! Miguel! Adolfo! Ruth!…

What’s the most and least you have paid for a coffee at Starbucks? Do you have a story about different prices?  Please share in the comment section.

3 thoughts on “How Many (Star) Bucks For That Coffee?

  1. Spotify uses price optimization, like, as you say in the blog post: anyone who can do it, does. They charge between $7 and $11 for a Spotify Premium subscription. 57% range.

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