Price Blind Customers

Posted on March 1, 2008
Filed Under Ripoffs

From the department of we-know-how-to-rip-you-off.

Coffeehouses love price blind customers. It’s not that they are willing to pay more for their coffees I am too. But the reason is that they confess to them and willing to pay whatever they ask. The instrument the coffeehouses use to extract that information is the menu board.

The choice you make on menu board sends a clear signal to the coffee houses. The menu board isn’t merely seeking to offer a variety of alternatives to customers. It’s also trying to give the customer every opportunity to signal that they are not looking at the prices.

It doesn’t cost much more to make a larger cup, use a flavored syrup or to add chocolate powder or a squirt of whipped cream. Every single product on the menu costs the coffeehouses almost the same to produce, down to the few cents or so.

Does this mean that coffeehouses are overcharging all of its customers? No. If so, a regular cappuccino or mocha would cost $4.50 and you could have all the frills you wanted for 50cents. Perhaps coffeehouses would like to do that, but they can’t force price-sensitive customers to pay those prices.

By charging wildly different prices for products that have largely the same cost, coffeehouses are able to smoke out customers who are less sensitive about the price.

Coffeehouses doesn’t have a way to identify lavish customers perfectly, so it invites them to hang themselves with a choice of lavish ropes.