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Is Starbucks Coffee Actually Too Cheap?

German study shows that consumers would pay 33% more for a small cup of Starbucks coffee


Starbucks SBUXA new study out of Germany shows that the seemingly already overpriced Starbucks (SBUX) coffee may actually be underpriced.

The study used brain wave measurements to show the emotional impact that consumers felt when reviewing different prices for cups of coffee.

The meat of the research showed that, in reality, consumers seemed to be fine with paying higher prices for Starbucks coffee than it actually costs now.

From Forbes:

The provocative notion that we’re not paying enough for a cup of java comes from scientist Kai-Markus Müller of Stuttgart-based The Neuromarketing Labs. Using EEG brain wave measurement, Müller’s firm gauged the emotional reaction of consumers to different prices for a small cup of coffee (a “tall”), which costs €1.80 ($2.45) at a Stuttgart Starbucks.

The firm claims their results show that our brains reject prices that are too low or too high as being unrealistic, and says that the optimal price point for that small coffee in Stuttgart would be €2.40 ($3.25).

So the optimal price of a small cup of coffee would be 33% higher than the current cost.

At the same time, the study cautions that “for commodity items like coffee, lower prices tend to increase sales while higher prices discourage them.”

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