“There are some things we do for the sake of tradition,” says Keith Coughlin, executive artistic director of the nonprofit theater house. He adds that rental proceeds go to charity, with the annual total usually exceeding $1,000 (or 20,000 nickels).
Coughlin says there was never a question of charging more for cushions — or pillows, to be precise — as a way to increase the venue’s contribution, or even fund its own activities. The whole thing is that the cost remains a nickel, almost like a nostalgic statement.
However, it is becoming increasingly difficult to find such examples of fixed prices. Many brands and brands say they inevitably have to break with tradition in order to stay afloat.
In New York, pizzerias that built their reputation on the low-cost $1 slice now often charge $1.50. And Dollar Tree DLTR,
the low-cost retailer, raised prices by $1 to $1.25 last year, although the company insisted the move was not the result of “near-term market conditions or transitory”.
Nevertheless, some anti-inflationary recalcitrants remain. Perhaps the most famous is Costco COST,
which has been providing its food court with a $1.50 hot dog and soda combo since 1985. It’s such a sacred cow—the hot dog is indeed made of beef—that when Costco founder Jim Sinegal , was once told by the chain’s CEO that the company needed to raise the price, he reportedly replied, “If you raise (the price of) the scary hot dog, I’ll kill you.” Understand it.
“Costco founder Jim Sinegal once said, “If you raise (the price of) the hot dog, I’ll kill you. Understand it.”
The good deals don’t stop there. You are thirsty ? AriZona Beverages continues to offer its plus-size iced tea cans for 99 cents. Fancy a musical evening? At the Hollywood Bowl, California’s famous concert hall, $1 “benches” have been offered for more than 30 years. In fact, this year the venue has more than doubled the number of cheap tickets to play what it calls “the idea of radical accessibility” to the arts.
Even your pooch can take advantage of the cheap deals. Bark, a company that sells dog food, toys and treats, is committed to pet owners who sign up for regular deliveries that their prices will stay the same forever. “Inflation sucks,” the company even says in its marketing.
So why do some companies keep their prices fixed in some cases, knowing that this often means barely breaking even, or even losing money, over time?
Retail experts say it’s not just about honoring tradition. On the contrary, it is a form of marketing in itself.
The idea, says John Talbott, director of the Center for Research and Education in Retail at Indiana University Kelley School of Business, is that an eye-catching low-priced item or offer can signal to consumers that the company emphasizes good business overall.
“You can almost think of it as a big billboard that says, ‘We’ve got good value,'” Talbott says.
There is also the call factor. That is, people will come for that item at a low price, but buy lots of other goods while they’re there – which aren’t that heavily discounted.
That’s certainly the case with Adam Olienis, a Costco shopper and comedian who lives in suburban New York. He’s a big fan of the chain’s $1.50 hot dog and soda offering, so much so that he says he “goes to town often” and gets two combos. But he also admits that he inevitably spends around $200 on Costco merchandise when he runs $1.50 frankfurters. A recent purchase included a pack of 36 dish sponges that Oliensis jokes is unlikely to go through the Biden administration — even if Biden gets a second term.
“So they pick me up,” Olienis says of Costco’s strategy.
Costco Executive Vice President Richard Galanti acknowledges that it has become more difficult to offer the $1.50 hot dog and soda combo, let alone the chain’s other valuable item – the chicken roasted at $4.99. The company doesn’t disclose its profit margins on individual offerings, but Galanti says “it’s definitely less than before” on these low-priced items. (And by the way, Galanti says Costco sells nearly 300 million of its hot dogs a year — 100 million through the food court and 200 million as packaged items.)
Still, there are ways to make a $1.50 hot dog and soda combo work, the Costco executive adds. Galanti notes that Costco built its own hot dog production plant to cut costs. And he regularly bids on his soda business – he’s flipped between Coca-Cola KO,
and Pepsi PEP,
products over the years – to get the best prices.
For 2 Bros. Pizza, the New York chain widely credited with making the dollar slice an icon of the Big Apple, a different solution has emerged to the problem of trying to “hold the fort” on cheap meals, like Eli Halali , one of the company’s founders, describes the dilemma.
In its new locations, 2 Bros. now charges $1.50 per share. But that matches the $1 figure at its long-established stores. In other words, it is a case-by-case approach.
Halali explains that he has enough foot traffic in existing locations to avoid raising prices (and he notes that he makes his real money from sales of pizza toppings and sodas). But in recently opened stores, the customer base isn’t there yet to make the math work for a slice of $1.
“It’s very difficult to start from scratch with this award,” says Halali.
Aly Walansky, a New York City resident and writer, says she hopes the dollar pizza survives in the end, noting that a cheap slice was often her go-to meal when she was a struggling college student. .
“I think the dollar pizza is part of our history and our culture,” she says.
In terms of long-standing trades, the share of the New York dollar, which emerged during the 2008 recession, is relatively new. AriZona Beverages has been selling 99-cent iced tea (and other beverages) since the 1990s. Company co-founder Don Vultaggio, 70, says it’s a matter of principle for him to continue to do it.
“I’m an old-school guy with a blue-collar past. I understand how difficult it is” for some people financially, he says.
Vultaggio says his company is also finding ways to save on costs to make the deal work. For example, he changed the design of the can to use less aluminum, while keeping the same amount of drink.
But what does the future hold for Vultaggio and its 99 cent offer? Will AriZona Iced Tea still cost the same decades from now – or will the company finally have to factor in inflation?
Vultaggio admits he can only think far ahead. “You’ll have to ask my great-grandson,” he said.