The Fixed Price of Coca-Cola from 1886 to 1959
en.wikipedia.org
en.wikipedia.org
- Lawyers screwing up the Coca-Cola founder on bottling
- Founder strikes back by advertising low bottled prices
- Price stable for 30 years
- They then try to raise price to 6c
- Company discovers that 1-coin pricing boosts sales
- President tries to convince the US Treasury to mint a 7.5c coin (?!?!?)
- Company using alternative strategies to bring the price up like placing empty bottles that some customer has to pay for
- Finally Coca-Cola, company who owns like 80% of vending machines, basically invents a method to reliably deliver change on machines.
Overall, I found it a surprisingly "canonical" story on how startup founders face adversities, how they try to lobby the government, screw up customers, and finally reach a creative solution based on technology that establishes their product!
It was because at the time vending machines couldn't make change, and they wanted to raise the price, but doubling (from 5 to 10 cents) would be too much.
Instead they figured out how to make the vending machine make change.
[1] http://rwatts.cdyn.com/download/slug%20rejectors/national%20...
edit: found an article [1] that answers my question.
Shows you how much power the Coca-Cola company had at the time, that they would even consider trying to make this happen.
Then, if you need to raise prices to $0.08 each, you can raise the price of a roll to $1.60, or keep it at $1.50 and replace one of the regular tokens with a non-redeemable collectors' token. And you definitely wouldn't have to follow up with a request for an $0.0833333 coin, or a $0.0925 coin, or any other completely useless fractional denomination.
Now think about freemium mobile games. The games that price their in-game purchases in a separate currency make more money than those that price their micropurchases in the user's native currency. People are less apt to make impulse purchases with real money. But if the only thing this stupid token is good for is one bottle of Coke, why not redeem it now?
What if you sold the tokens for $0.08 each, and you sold the rolls at a discount of 6% off, at $1.50 for 20. Maybe you sold a box of 20 rolls for $24. You just made distributing Coke tokens into a profitable business, and broke the tie to the nickel.
Does that sound familiar in any way?
I can't even imagine the thought process that might have led to believing that would ever work, at any step in the process.
I am merely describing one thing of the many, many possible things that would have been less colossally stupid, even though it still may be inferior to just dropping the outdated requirement that one coke equals one coin, and it can't be a dime (because that's too much) or a penny (because that's not enough).
If you knew you liked Cokes, you might buy tokens in advance, instead of on impulse, and pass them around as near-cash equivalents. Though I must admit that if I only bought one thing with real cash from a vending machine, it would still be a more frequent occurrence than buying virtual nothings in a freemium game, so it was just a bit insincere. If I had to use tokens, I'd probably never get any Cokes.
[they] briefly implemented a strategy where
one in every nine vending machine bottles
was empty ... this effectively raised the
price to 5.625 cents.
(This might be illegal, since, it's a lot like gambling, but both versions should be equally illegal.)
http://www.npr.org/sections/money/2012/11/15/165143816/why-c...
So they asked the U.S. Treasury to issue a 7.5-cent coin."
That is an absurd strategy.
They'd have to randomize them. But then you might get several blanks in a row. But you could still count the total number of blanks in a particular machine like counting cards at blackjack and buy only when opportune. So you'd need to randomize them nationally. But then you'll get machines that are entirely empty and dispense only blanks on any given load!
Even so, I agree that it's an impressively awful idea. A lot of customers would have been kids who only had one nickel.
Recall that old-fashioned vending machines typically did not have the see-though, glass front panel.
The Coca-Cola Company sought ways to increase their prices, even approaching the U.S. Treasury Department in 1953 to ask that they mint a 7.5 cent coin.[1] The Treasury was unsympathetic. In another attempt, The Coca-Cola Company briefly implemented a strategy where one in every nine vending machine bottles was empty.[1] The empty bottle was called an "official blank".[2] This meant that, while most nickels inserted in a vending machine would yield cold drinks, one in eight patrons would have to insert two nickels in order to get a bottle. This effectively raised the price to 5.625 cents.[1] Coca-Cola never implemented this strategy on a national scale.