On Pricing Comic Books, And Happy Tacos

In a number of my positions in my professional career, I have worked on product pricing and the following statement continues to be my philosophy on pricing.

Price is what the market will bear.

As I have found, the cost of an item is but one of several factors that ultimately influence pricing strategy.

Take for instance, the Tacodeli in Austin and their “Happy Taco.”

I am a big fan of the “Happy Taco” ($2.95).  It’s so good that Texas Monthly named it one of their favorite 100 tacos in Texas.

There are tangible item that go into the cost to producing a “Happy Taco.”  The quality chicken meat.  The fresh vegetables.  The cheese.  The tortilla.  Those are physical parts that must be constructed to build the “Happy Taco.”

Then there are labor costs like the hard working people in the kitchen.  The nice people at the register.  Adding to that are other costs like the basket it’s served in.  Napkins.  The rent on the space they operate out of.  Janitorial supplies and so on.  Operating costs.

Then factor in the intangibles.  the physical parts of the “Happy Taco” are an intellectual properly created by the owner.  He has years of experience working as a chef and it’s his ability to construct this taco in the kitchen and use his knowledge and capability to not only invent it, but figure out how to properly execute it on a mass scale so that it gets from kitchen-to-plate-to-stomach and still taste great.

There’s also the intangible for the Tacodeli brand.  People go there because they want to support the restaurant and be a part of the brand and also experience of going to the restaurant.

While I have no insider knowledge, we can assume that these tangibles and intangibles still combine to equal something less then price point of $2.95.

The difference in cost and price is their margin and the price is $2.95 because that is what consumers will pay.

How can we be sure that consumers will pay $2.95?  On any day of the week, go to one of their locations at 11:45 AM and watch the fast moving, but continuous line of new and old faces ordering lunch.

In all my years going to the Tacodeli, I can not recall a time when I’ve seen a manager have to argue with a customer over the price.  Why?  Because people who do not wish to pay $2.95 for a taco will go elsewhere and find an alternative.

So, getting to comic books.

My advice to people who gripe about comic books being $3.99: don’t buy those comic books or go elsewhere for your entertainment.

I can only speak for America, but I have the United States of America Constitution on my iPhone and I recently re-read it.

Yes, the First Amendment protects freedom of speech (the consumers right to gripe about stuff like this) but to that point, nowhere in the document does it say that we must buy comic books.*

If comic books will not sell for $3.99, the price will go down.  The market will adjust.

For all of the griping in public from consumers, the reality is that if there are people that will pay then that becomes the price until they do not.

Music, television and film are priced the way they are because at the end of the day people are purchasing those media at those prices.

Prices fluctuate based on the reaction from the market.  Sometimes those prices connect immediately with consumers (like 99¢ songs in iTunes).  Other times, it takes a few tries to get it right (DVDs prices which continue to fluctuate).

At these volumes, prices will go down to try to attract more customers (and spread margins across a larger base) or go up (to absorb more revenue per customer).

The point is, and I will repeat this once again – pricing is what the market will bear.  So if you’re OK with $3.99 comic books, buy them.  If you want to send a message to publishers that you are not OK with $3.99 comic books, don’t buy them.

* I also know this to be true because, let’s face it, comic book sales are less than that of other entertainment media.

** these statements do not reflect anti-trust laws and the like, which of course have to be adhered to when developing pricing strategy.

*** I used the Tacodeli as an example because it seemed like the logical thing to do; use a  metaphor instead of getting into publishing costs, etc.  I could have easily used Jiffy Lube or a 7-11.  But this was a lot more fun and the fact remains, if you live in Austin or come here to visit – go to the Tacodeli!

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