Monday, March 15, 2010

Margin Pricing

McDonalds has the following interesting price scheme.
Mighty Muffin $3.95
Mighty Muffin + Hash Brown $5.45
Mighty Muffin + Hash Brown + small coke $4.10
Effective price of a small coke -$1.35

A similar pattern was seen at a Night Owl as well
600ml coke $3.90
1.25l coke $4.50
2l coke $3.00

I think the main point to take away from this is that the amount we pay for some stuff depends not on the costs of production but more what they think people are willing to pay for something.

Also, please don't take this as an endorsement of any of the products mentioned. I'm just looking at the pricing anomalies.

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