Economics @ ITT

Consistent Pricing Models

Posted in economics by ittecon on January 8, 2014

A few years ago, I used to eat a McDonald’s Egg McMuffin without meat (AKA, Canadian bacon or ham) most mornings, and then I learnt that I could order the ingredients separately for less money—almost a dollar less in some markets. Ordering an Egg McMuffin without meat afforded me no price break despite not depleting McDonald’s of their meat.

A supervisor explained that I could get the same sandwich at a discount by ordering an “English muffin, add round egg and cheese.” I discovered that the prices changed from location to location, but I stopped buying Egg McMuffins when I found a place that sold omelets at a good price.

I have recently changed employers, and I am still looking for a decent breakfast at a reasonable price. This morning I ordered an English muffin, add round egg and cheese, but to my surprise and chagrin, the price was higher than the Egg McMuffin.

I don’t think it is too much to ask for different restaurants within a brand to utilise a consistent pricing model—even if they have some nuance in the underlying constituent pieces. In my case, it would make more sense to discount a customer for not consuming a certain component.

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