Same Product, Same Price, Different Pricing Model

A real world example of how different pricing models attract different buyers to the same product at the same total price.


The shot above was taken at a large food market called the St. Lawrence Market (named by National Geographic as the world’s best food market) and shows my favorite butcher. I have been loyal to them (rarely buying meat anywhere else) for almost twenty years because of their excellent service and great product.

They usually sell beef ribs and pork back ribs by the pound. I think they charge something like $2.99 a pound for pork ribs and $5.99 for back ribs. I say "think" because I can't remember for certain. I should know, because I love ribs (beef and pork), but the truth is that I almost never buy them when they are sold by the pound.

It's partly because I hate the idea of paying by the pound knowing that so much of the weight (the bones) is just going to be thrown away. Paying by the pound for something I know I'm going to discard just doesn't feel right so, if my only choice is to buy ribs by the pound, I tend not to buy them. It turns out I’m probably in the minority, and that more people are probably drawn to the product when the price is expressed in the lower per-pound format.

The other thing I don’t like about per-pound pricing for this product is that I prefer cost certainty. With ground beef for example I can specify exactly how much I spend – I can ask the butcher for two pounds of lean, etc. With steak I can ask for say three twelve ounce steaks. It doesn't work like that with ribs - you’re getting the whole rack and you don’t have much control over the extended price.



Sometime however Bob (the butcher, shown in the picture above with his back to the camera) would sell his ribs at fixed per-rack prices. He would sell racks of beef or pork ribs for $10 each.

This pricing model appealed to me tremendously and I would almost always buy.

Why? Partly because it felt like a better deal. I was happy to pay $10 for the meat that I would enjoy and I was no longer thinking about the bones I was throwing away. It also gave me cost certainty – I knew exactly how much the rack I had fallen in love with was going to cost.

So it went for a long time… if he was selling by the pound I didn’t buy, if he was selling by the rack I did.

One day last fall I had committed to making ribs for some friends that were coming over. I needed four racks and I was hoping I could get them for $10 each.

Unfortunately that week they were for sale by the pound. I didn’t want to buy them but I had to – I had promised friends.

The price of four racks when purchased by the pound? $40.23. Almost exactly the same as the $10 per I had been hoping to pay.



Bob explained that the either pricing model worked out to about the same amount and he changed the pricing models depending on how things were selling.

I told him that I preferred to pay by the rack, but he said he generally sold more with the per-pound model. He believed more people were drawn to a lower per-pound price than a higher total fixed price, but he used the per-rack model about one week out of the month because it seemed to prompt different people to buy.

It turns out Bob is a lot like a fisherman. A fisherman usually starts a day at their favorite spot with the lure that has worked best for them in the past. If that lure starts catching fish they will stay with it. If it stops producing they will switch to another.

So it is with Bob. He is one of six butchers in a busy market. Historically the per-pound pricing model works best so that is the one he employs most often. If it feels like it isn’t producing he’ll switch to the per-rack pricing model for as long as it seems to produce. Some people probably buy either way but others, that have a strong preference one way or another, are activated by the change in pricing model.

Bob is a really smart guy and in the end he came up with the best solution possible. As you can see in the photograph below he has a corner. Along one side of his space he sells ribs by the pound, and along the other he sells them by the rack. The same product, essentially the same price, just presented in slightly different ways in order to appeal to more people.