Price Inversion – Should your business adopt this?

balthazar_priceTake a look at the prices for espresso from that restaurateur Balthazar used to charge at his restaurant Pastis. Yes it is not a mistake. The single shot espresso costs you $1 more than the double shot.

Is this clever pricing?

You may be tempted to think that those eating dinner likely value single espresso more than double (because they don’t want to stay up). Hence they may be willing to pay more for single vs. double.  As you can see from Balthazar’s remarks he is doing it as a gimmick and not as measured strategy to maximize sales.

Should we adopt this for our products?

Absolutely not. Definitely not as pricing strategy and not even as a gimmick. You can bet everything else in his restaurant is premium priced to match the perceived value of customers they target. Espresso contribution to revenue mix is likely a small fraction compared to their wines and entrees. And they can afford to do this for the customers they understand and target. That does not mean this is something we can take home and apply to our products.

Had we not known this remark any guru passing by might be tempted to read more into this than there is. Thankfully we are saved from a book titled

“Charging More for Less: The Future of a Radical Price”

One thought on “Price Inversion – Should your business adopt this?

  1. I am guessing Balthazar has accounted for customers who may buy the double espresso and split it two ways in order to get each shot @ $1.50? This is the problem with price inversion or upside down pricing. It may get a few tongues wagging initially – but in the long run, customers will find a way to game the system to their profit. Worst case they may feel exploited and dissatisfied with this tactic which would not augur well for the business.

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