Latest / Pricing Power Podcast with Fexingo: How Businesses Set Prices, Raise Margins, and Win Customers
How Starbucks Prices the Five-Dollar Latte
In this episode of Pricing Power, Lucas and Luna unpack the economics behind the five-dollar latte. They trace Starbucks' pricing evolution from Howard Schultz's third-place vision through the 2024-2025 cost crunch, showing how the company balances premium positioning with customer pushback. Key numbers include the 37 percent gross margin on a latte versus the seven percent on a drip coffee, the role of the Starbucks Rewards app in price discrimination, and how the 2025 mobile-order surge forced a rethink of store pricing. The hosts also explore the tension between Starbucks as a…
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