Financial Head Scratchers: Always Buy More Beer
I was in the liquor store over the weekend picking up some adult beverages when I came across the picture above in the display cooler. On the left is a six pack of 12 ounce cans, and on the right a six pack of 16 ounce cans.
The fact that they were the same price had me scratching my head.
The six pack on the right represents 1/3 more beer than the package on the left (96 ounces vs 72 ounces). Without hesitation, I selected the 16 ounce cans and headed to the checkout counter. But on the way home I couldnâ€™t help but wonder why these two products would be the exact same price.
Hereâ€™s what I came up with:
- Cost of Production: Maybe the cost of manufacturing represents a much higher percentage of the cost than the actual product inside the can, resulting in a similar cost.
- Popularity of Product: Working with computer servers, I know that the more you can mass produce something, the less it costs per unit. As sort of a spin on the first point, maybe the larger cans are much more popular, bringing down the price per unit allowing the manufacturer to price them equally.
- Temporary Price: Maybe the manufacturer is gently guiding consumers to the larger product, getting them used to the idea of buying the larger cans. They take a slim profit margin now, and then later they discontinue the smaller cans and jack up the price of the remaining product. I know thatâ€™s a cynical perspective, but manufacturers do some questionable stuff to increase profits.
- Retailer Sets The Price: Maybe the retailer just isnâ€™t selling much of the larger cans, and is offering them at a discount to move the product.
The other thing that had me confused is why anyone would choose the smaller cans and deliberately take home less product. The only thing I could come up with is some people may not want to drink that much beer at a time, or a can that size would get warm before they finished it.
I can safely say neither of those applies to me.
Have you ever seen two products of different sizes priced the same? Would you ever choose the smaller product in such a situation?
Brought to you courtesy of Brock