Check out this Domino's menu (Peddar Road, Mumbai):
No?? Got an eye problem?? ( I was told this is RUDE!! )
Go back to the image again. Stare at it, PLEASE!!!
Do you see it now??
Well, this is what I see:
Look at the top of the menu where a 7" Margherita costs Rs. 75.
If you go for the 10" Margherita, it costs Rs. 170!!
(Oh, the Strikeouts represent a mistake in my calculations). See the note and the end of the post.
Technically, a 10 inch pizza in size is 43 % more than the 7 inch pizza.
But cost-wise, Rs. 170 is 126% more than Rs. 75 !!!!
In fact, if I buy 2 Domino's pizzas of 7 inches each, I get 14 inches of pizza and pay Rs. 150; but I need to pay Rs. 170 to get only 10 inches!!
Look further - If I buy 3 pizzas of 7 inches each, I get 21 inches to enjoy and pay Rs. 225; whereas 13 inches as a single pizza costs me Rs. 315!!!
This proves that:
- Consumers are completely irrational when it comes to making pricing decisions when they see choices.
- The choose the size they want, not the price.
- Then, they just 'accept' the price presented to them!
- Create a 'need based' pricing matrix - not a volume or input based pricing structure. Notice how the Inches (") printed, is the smallest font on the menu!
- By presenting lots of variations and choices, the human mind migrates to what it wants. It does not look at alternative options when one choice seems logical:
To elaborate - if the 2 of us are eating a pizza, we may call for a medium pizza and share it.
Instead, we should call for 2 separate pizzas and also give away a few extra inches to some friends!
We would've saved money and made someone happy too!
- Don't get too scientific about pricing. Get fuzzy, irrational and emotional. It works!!!
Hope I have whetted your brain's appetite!!
Correction and additional note
So, I erred when I assumed that the Pizza size as 7" without considering the area of a pizza and how its size should really be calculated.
I was STUPID, SILLY, AN IGNORAMUS and got beaten to death on facebook :-(
Having said that, I calculated the 'cost per pizza inch' of all the sizes and all the varieties, and guess what??!!
The pricing is DEFINITELY Irrational, but may not be wildly so.
In the case of the Veg. pizzas, the cost goes UP as you buy larger sizes, whereas in the case of the Non. Veg pizzas, the cost comes DOWN (for bigger sizes)...
Aamazing !!! though I dont eat Pizza much but have been buying the same for others and have never noticed this. In fact when it comes to eating we never realise that its yet another transaction and we must measure the value we get at the cost of our hard earned money !!! Thanks for opening my eyes Rodinhood :) next time I am going to order three seven inches !!!!
The pricing isn't irrational. It is simply non-linear (within a pizza-type) and non-uniform (across types). Without looking at their cost structures, sales volumes and profit margins for each of these, it is impossible to say what the price structure implies. But saying that it is irrational is "jumping to conclusions".
Completely agree with your post on irrational pricing. It is the same thought process that goes when pricing things at $685 - customers think of the pricing as closer to $600 when it is in fact closer to $700 as that rationalises things. Another example of emotional pricing would be to remove the tax component to make the pricing more attractive - this can swing either ways as though I may be tempted to pick up a dress that is only $50 now instead of the previous $80 - once the tax is added in and the dress costs me $60 it turns me off and make me feel like it is a fake sale.
Though for the sake of supporting Dominos I must say that the reason it makes more sense to go with the medium pizza than 2 smalls is that with the 2 smalls you may end up with 14inches but that would be more of bread than the topping while the medium pizza will equal more topping while the bread content only increases slightly.
Alok: You need to look at the area of the circle to compare not the diameter! 21 inch PIZZA is three times bigger than three 7 inch PIZZA. I assume the inch mentioned there is the diameter of the PIZZA.
Area wise, 13 inch piZZA is 3.45 times bigger than one 7 inch PIZZA. Ofcourse, weight and quantity is related to area. (Calculated based on the area of the circle - PI * R * R.)
It is about area and hence medium is 2 times and large is 3 times of the regular .. still the pricing is not in line with the area of the pizza.
Braj: I agree. There is a slight difference in pricing (medium is 2.04 times, regular is 3.44 times) if we take the area based calculation. Not sure what reason Domio will give for this. To be sure 100%, we need to look at the weight as well to check if they add more toppings (thick layer) for the bigger ones.
Of course it isn't exactly aligned to the area - that's only because their costs and sales volumes for each size are different. It is not "irrational" at all as this article suggests (that too based on an extremely flawed calculation).
The size of a pizza is proportional to the square of it's radius (area of a circle is pi*r*r) - so a 10 inch pizza is more than double a 7 inch pizza in area.
Size of a 7 inch (diameter) pizza = 38.48 square inches
Size of a 10 inch (diameter) pizza = 78.54 square inches
Size of a 13 inch (diameter) pizza = 132.73 square inches
Time for a geometry lesson.
Bhai...Understand the intent..! Irrational pricing he means not just sticking to numbers...adding emotional component too into it. If 'rationally' you calculate Bread+Cheese + toppings...price will be much lesser. Same content, similar cooking time , Pizza in regular hotel may cost much lesser. Audience is different. Product service might be same / similar.
Whenever i want one bowl of soup, I order "one-by-two"... I feel I get more quantity for the same price..
This was amazing ! I actually laughed thinking I always bought medium sized pizza :D You are a better Maru than me