Pricing at Starbucks and Six Tactics You Should Know About

In this show, Ed and Ron discussed the following post:

“6 psychological tactics behind the Starbucks menu,” Kent Hendricks, March 20, 2018

So What Are The Tactics?

Why you like the drinks at the center of the menu
Why you’re most likely to select the Grande size
Why looking at three columns of prices makes you spend more
How Starbucks uses the attraction effect to frame your choice between a Grande and a Venti size
Why the Starbucks menu doesn’t include a dollar sign
Why Starbucks prices end in .95 instead of .99

…And What Are The Behavioral Effects Behind Each Tactic?

The Center Stage effect
The Comprise effect
Lower price on left (first): We spend more
The Attraction effect frame Grande and Venti
No Dollar Sign
Prices end in .95 instead of .99

Let’s talk in more detail about number 5. Currency symbols get you to think about money which makes you less likely to spend said money. $20 and 20 and twenty are all semantically the same thing but there is a big difference in salience. The $ symbol is a symbol of cost and it reframes your thinking. The $ symbol represents what you are losing, not getting.

Number 6 poses an interesting tactic as well. The 99 in .99 signals a low cost but the 95 in .95 signals high quality. For Starbucks, the .04 loss (1.33% per transaction) more than makes up for the high quality perception and the positive effect on their brand.

Parting Thoughts

“Summaries of human behavior explain a great deal but predict very little,” Robert Sapolsky.

We can observe behavior in aggregate, then seek to explain that behavior. However, we cannot do the reverse. We can’t use an explanation of behavior in aggregate to predict how any single individual will act.