
The Fixed Price of Coca-Cola from 1886 to 1959 - dpflan
https://en.wikipedia.org/wiki/The_fixed_price_of_Coca-Cola_from_1886_to_1959
======
carlesfe
This story is so interesting!

\- Lawyers screwing up the Coca-Cola founder on bottling

\- Founder strikes back by advertising low bottled prices

\- Price stable for 30 years

\- They then try to raise price to 6c

\- Company discovers that 1-coin pricing boosts sales

\- President tries to convince the US Treasury to mint a 7.5c coin (?!?!?)

\- Company using alternative strategies to bring the price up like placing
empty bottles that some customer has to pay for

\- Finally Coca-Cola, company who owns like 80% of vending machines, basically
invents a method to reliably deliver change on machines.

Overall, I found it a surprisingly "canonical" story on how startup founders
face adversities, how they try to lobby the government, screw up customers,
and finally reach a creative solution based on technology that establishes
their product!

~~~
jedberg
> President tries to convince the US Treasury to mint a 7.5c coin (?!?!?)

It was because at the time vending machines couldn't make change, and they
wanted to raise the price, but doubling (from 5 to 10 cents) would be too
much.

Instead they figured out how to make the vending machine make change.

~~~
Animats
Yes, and there lies the interesting story of National Rejectors, Inc., which
for decades had a monopoly on fake coin detectors.[1] Even today, most vending
machine coin mechanisms are clones of that design. In a mechanical unit about
4 inches square and an inch thick, coins are tested for size, holes, weight,
resiliency, electrical conductivity, and magnetic properties. It's an elegant
bit of engineering.

[1]
[http://rwatts.cdyn.com/download/slug%20rejectors/national%20...](http://rwatts.cdyn.com/download/slug%20rejectors/national%20slug%20rejectors.pdf)

~~~
caminante
Interesting. Is it cost-prohibitive to circumvent those test parameters, now
(or since inception)?

edit: found an article [1] that answers my question.

[1]
[https://en.wikipedia.org/wiki/Slug_(coin)](https://en.wikipedia.org/wiki/Slug_\(coin\))

------
cbr

        [they] briefly implemented a strategy where
        one in every nine vending machine bottles
        was empty ... this effectively raised the
        price to 5.625 cents.
    

Instead, charge $0.10 but 44% of the time you get your dime back along with
the bottle. Effective price is the same 5.6 cents, but people are excited to
get free bottles instead of mad and disappointed.

(This might be illegal, since, it's a lot like gambling, but both versions
should be equally illegal.)

~~~
garth5689
The problem was that the vending machines were not set up to take dimes at the
time.

[http://www.npr.org/sections/money/2012/11/15/165143816/why-c...](http://www.npr.org/sections/money/2012/11/15/165143816/why-
coke-cost-a-nickel-for-70-years)

~~~
cbr
They were willing to lobby for a 7.5 cent coin and update their machines to
recognize that, so it sounds like they could have handled dimes. The reason
they didn't want to switch to dimes is that it was too big of a price jump.

~~~
ghaff
I'm curious how they eventually handled the changeover. I seem to vaguely
recall Cokes when they were a dime (in the mid-sixties or thereabouts) in the
machine. I also don't ever recall vending machines taking pennies or giving
change in pennies--though perhaps they did. I just also have some trouble
believing that Coke vending machines pretty much doubled in price over a few
years.

~~~
Wingman4l7
I don't think vending machines even now will give pennies in change.

------
dpflan
Inspired by this Planet Money episode:
[http://www.npr.org/sections/money/2012/11/15/165143816/why-c...](http://www.npr.org/sections/money/2012/11/15/165143816/why-
coke-cost-a-nickel-for-70-years)

~~~
percept
"Levy says the folks at Coca-Cola thought about converting the vending
machines to take a dime. But doubling the price was too much. They wanted
something in between.

So they asked the U.S. Treasury to issue a 7.5-cent coin."

~~~
Nicholas_C
>In another attempt, The Coca-Cola Company briefly implemented a strategy
where one in every nine vending machine bottles was empty.

That is an absurd strategy.

~~~
pageld
According to the planet money episode, Coke never actually implemented it.
They just discussed the merits of it and if it would actually work.

------
readams
I love the idea of the blanks in the machine! It's an impressively awful idea.
The problem of enraging your customers is obvious of course, but an even
bigger issue would be if people could predict when the blanks would appear.

They'd have to randomize them. But then you might get several blanks in a row.
But you could still count the total number of blanks in a particular machine
like counting cards at blackjack and buy only when opportune. So you'd need to
randomize them nationally. But then you'll get machines that are entirely
empty and dispense only blanks on any given load!

~~~
theseatoms
> ... an even bigger issue would be if people could predict when the blanks
> would appear.

Recall that old-fashioned vending machines typically did not have the see-
though, glass front panel.

~~~
readams
I just meant that if they do the obvious thing and load every ninth slot as a
blank, customers will know when it's safe to buy by watching other customers.
Nobody would want to be the first!

------
hapless
Here is the original paper, un-mediated by wikipedia.

[http://www.biu.ac.il/soc/ec/d_levy/publications/jmcb4.pdf](http://www.biu.ac.il/soc/ec/d_levy/publications/jmcb4.pdf)

------
cryptoz
Previous discussions:

[https://news.ycombinator.com/item?id=4788659](https://news.ycombinator.com/item?id=4788659)

[https://news.ycombinator.com/item?id=9796275](https://news.ycombinator.com/item?id=9796275)

------
7Z7
_Attempts to raise prices_

 _The Coca-Cola Company sought ways to increase their prices, even approaching
the U.S. Treasury Department in 1953 to ask that they mint a 7.5 cent coin.[1]
The Treasury was unsympathetic. In another attempt, The Coca-Cola Company
briefly implemented a strategy where one in every nine vending machine bottles
was empty.[1] The empty bottle was called an "official blank".[2] This meant
that, while most nickels inserted in a vending machine would yield cold
drinks, one in eight patrons would have to insert two nickels in order to get
a bottle. This effectively raised the price to 5.625 cents.[1] Coca-Cola never
implemented this strategy on a national scale._

------
conductr
NPR: Planet Money has a good podcast on this topic

