I always order the same drink at Starbucks (Grande Dirty Chai Latte), so when I went to a different location the other day I noticed the price was different.
I wondered if I had ordered wrong or if Starbucks prices change by location. We looked into it and found…
Do Prices At Starbucks Vary By Location?
Starbucks prices can vary quite dramatically from location to location. This is due to a variety of reasons ranging from individual location costs, staffing and supply issues, and finally to the steady influence of Starbucks pricing policies.
This article looks at the reasons for the variations in prices between Starbucks outlets: why it happens, where it happens, and why it’s likely to remain this way.
Why Do Starbucks Charge Different Prices In Another Store For Exactly The Same Drink?
The operation of any Starbucks store is heavily affected by regional factors. Think Starbucks USA compared to Starbucks Japan, for example, or Starbucks in any one of the 80 countries in which the Starbuck chain operates.
Operating costs, market conditions, staffing policies, produce availability, transport, climate, and licensing arrangements are just some of the issues which will influence the price of your coffee. All of these vary markedly from country to country.
At a regional level, the same impacts apply, although not as strongly. However, coffee prices will still vary between obvious location differences such as an airport Starbucks, the university Starbucks, any Starbucks within a resort, and the corporate standalone Starbucks with a drive thru.
Other factors affecting the price of your drink are outside the control of any Starbucks facility. These include things which can fluctuate, disappear altogether, and which affect all similar businesses in the same way:
- Daily prices (and availability) of milk and all other dairy products
- Daily prices (and availability) of all non-dairy products and coffee beans
- Value of real estate per location
- Labor costs and availability
- Local business insurances, taxes, and utilities
- Weather conditions, natural disasters
How Does Starbucks Price Their Drinks?
According to Tucker Dawson in How Starbucks uses Pricing Strategy for Profit Maximization, Starbucks regularly target only certain regions for price increases, and that regions are selected according to the market activity in those areas.
This means that price increases will be directed toward specific consumers and applied only to specific items.
Starbucks use consumer research and customer analysis to formulate targeted price increases that capture the greatest amount consumers are willing to pay without driving them off.
In other words, Starbucks scrutinize the market closely and caters for (and win over) the loyal higher income consumer. These customers are not price sensitive, and they perceive their coffee as an affordable luxury. They won’t ever skimp on a much-needed coffee to save money, viewing the price increases simply as a ‘necessary evil’.
In order to compensate for the customers lost to cheaper alternatives like Dunkin Donuts, Starbucks raises prices to maximize profits from the price insensitive customers, who depend on their daily coffee choice.
This means that you may notice Starbucks outlets increasing prices for specific drinks and sizes rather than for the whole menu. In general, loyal and consistent consumers choose to weather this price increase rather than change their choice of beverage or even café.
Usually ‘increased commodity costs’ is used to justify the increased price, and this is quite often true anyway. Therefore, most consumers, beyond puzzling over the inconsistent pricing across Starbucks outlets, don’t usually stress over it too much.
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If you’ve noticed that you seem to pay a slightly different price for your coffee each time you visit a new Starbucks location, then you’re not alone.
And you do! Starbucks is one company for sure, but it’s made up of a chain of stores.
Each of these outlets operates under different requirements and the variant under the most influence is the product price. In other words: your favorite handcrafted artisan coffee.