It seems like one of the rare universal grievances these days is the ever-rising price of a coffee shop drink—“A $7 latte?!”

Yet, walk by any airport Starbucks at any time of day, and you’ll see a snaked line of people waiting to fork it over.

Here’s the question:

Have you ever actually been asked how much you’d like to pay for that coffee?

Probably not.

Even if you had been asked, would you have said $7?

So what’s going on? How did Starbucks arrive at a $7 latte?

Sure, supply/demand, price elasticity, market testing, cohort analysis etc.

Maybe they even brought in BCG or McKinsey for a pricing study.

But what about an independent coffee shop without analysts, marketers, and millions to spend on this?

How did they set their drink prices?

Did they ask you what you thought was appropriate?

Again, probably not.

Instead, the coffee shop sets prices they believe can sustain a profitable business.

Then, separately, you decide whether or not it is worth it for you.

We’ll be breaking down some pricing concepts over the next couple of days.

As we do, remember that you’re the coffee shop.

And your ultimate goal is not to sell an individual cup of coffee…

but rather, to design and sustain a profitable business.

💡

-Wes

Btw, what are some examples where you’ve been asked what you want to pay for something? I came up with a few (home, car, auction) — where else? 🤔

Hit 'reply' and let me know. I'd love to hear them.