Good Question: Why Do We Spend More for Bombers?
I left town late Friday morning and missed a fascinating discussion about beer pricing. Bill at It's Pub Night starts off the discussion with a data point:
Our resident beeronomist, Patrick Emerson, takes the data point and explains it.
I look at the new beers and I see if there's anything I haven't tried. Mostly, breweries are now introducing their new beers in 22s before they commit to putting them out in sixers. (The expense to launch a new line of sixers is greater than bottling up a single run of 22s.) Most of the variety exists on the 22s side, so that's where my impulse for novelty guides me. Pretty much only quality beers are offered in 22s. Cut-rate or faux micros almost never make it into 22s. So far I'm two for two. Now comes the issue of pricing. If a 22 is five dollars or less, its absolute cost is lower than a sixer. This pleases my unsophisticated lizard brain, which isn't adept at making per-ounce calculations on the fly. I'm just thinking that I'll spend more for a 22 than a sixer. Which takes us to the final criterion: quantity. A bomber seems like a fair amount of beer. Again, my unsophisticated mind isn't adept at thinking of volumes clearly. It's a big bottle, it will satisfy my impulse, and it even seems like a value--more beer than a pour in a pub, at about the same price. Off I go with my bomber, thinking I've gotten a pretty good deal.
This doesn't apply to bombers priced north of $5 (I always balk at $6 Pelican, and I observe myself and wonder why that dollar makes such a difference). And when I see a particularly cheap sixer of beer I admire, I'm willing to forgo novelty. So the criteria sometimes do change my decisions.
I suspect this is in line with Patrick's theory, but I'd be interested to hear if economists have gotten into that fine-grained study of motivations.
______________
Share
But there's a related pricing issue that doesn't make any sense at all: the disparity between the retail prices of 22-ounce bombers and 12-ounce bottles sold in 6- or 12-packs.... For each of the above beers, I took theIn his careful way, Bill also details the price disparities on several types of beer where six-pack and bombers are both for sale in a grocery store. So: 22-ounce bombers are more expensive than six-packs on a per-ounce basis.lowest big-bottle price and compared its SPE to that of the lowest small-bottle price. That highlights another aspect of the bomber trickery: bomber prices are marked down less frequently than 6-packs or 12-packs, which are on sale almost every single day at big groceries.
Our resident beeronomist, Patrick Emerson, takes the data point and explains it.
The answer, to economists, is well known and goes by the term 'price discrimination,' or more specifically in this case 'second-degree price discrimination.' Price discrimination in general is the ability to charge different customers different prices for the same good based on their ability to pay. You charge more to people who value the good more and less to those that don't....While I think Patrick's explanation is probably sufficient for economists (practitioners of the dismal science), I wonder if it leaves something out. One is always reluctant to use personal experience as a proxy for human behavior, but, owing to the rather fluid standards of this blog, I'll make an exception. When I walk into a store looking for a new beer, I have several complementary and competing criteria floating around unexamined in my mind. I want a beer that will offer me: value, novelty, quality and quantity.
This is classic third degree price discrimination and can be applied to Bill's 22 ounce bottles as well. There are low demanders for these beers who want just a wee bit to taste and high demander who will drink much more. By pricing the 22 ounce bottle so much higher you charge a premium to the low demanders and you give a discount to the high demanders by offering them a volume discount in six packs (and generally even better deals with 12 packs).
I look at the new beers and I see if there's anything I haven't tried. Mostly, breweries are now introducing their new beers in 22s before they commit to putting them out in sixers. (The expense to launch a new line of sixers is greater than bottling up a single run of 22s.) Most of the variety exists on the 22s side, so that's where my impulse for novelty guides me. Pretty much only quality beers are offered in 22s. Cut-rate or faux micros almost never make it into 22s. So far I'm two for two. Now comes the issue of pricing. If a 22 is five dollars or less, its absolute cost is lower than a sixer. This pleases my unsophisticated lizard brain, which isn't adept at making per-ounce calculations on the fly. I'm just thinking that I'll spend more for a 22 than a sixer. Which takes us to the final criterion: quantity. A bomber seems like a fair amount of beer. Again, my unsophisticated mind isn't adept at thinking of volumes clearly. It's a big bottle, it will satisfy my impulse, and it even seems like a value--more beer than a pour in a pub, at about the same price. Off I go with my bomber, thinking I've gotten a pretty good deal.
This doesn't apply to bombers priced north of $5 (I always balk at $6 Pelican, and I observe myself and wonder why that dollar makes such a difference). And when I see a particularly cheap sixer of beer I admire, I'm willing to forgo novelty. So the criteria sometimes do change my decisions.
I suspect this is in line with Patrick's theory, but I'd be interested to hear if economists have gotten into that fine-grained study of motivations.
______________
Share