For over 70 years after its inception, Coca-Cola was sold at 5 cents ($0.05). This price remained constant even after the beverage gained popularity.
Why?
Why?
Well, it all lies in a business decision made by the then President of the company- Asa Candler. Back in Candler's time, Coca-Cola was mostly sold through soda fountains. But in 1899, two lawyers had a bright idea- they wanted to sell Coke in pet/glass bottles.
So they approached Candler to buy the bottling rights. Candler thought the idea would never really take off, and agreed to sell the lawyers the syrup at a fixed price- forever. They, however, could sell bottled Coca-Cola at any price they deemed fit.
To Candler's surprise, bottled Coca-Cola soon took off and its price started inching up. However, the company still made only a fixed few cents on every bottle sold, as per the contract. But they wanted more.
They realized they could capitalize on demand- make more money through more bottle sales. And the way to sell more bottles was to keep the price low. However, they couldn't decide the price themselves. So they resorted to other tactics.
They launched a massive ad campaign proclaiming- "Drink Coca-Cola, 5 cents only".
The idea was to tell consumers the actual price of the beverage, so the bottlers couldn't increase it. And it worked! The prices came down, more bottles were sold, and Coca-Cola made more money.
The idea was to tell consumers the actual price of the beverage, so the bottlers couldn't increase it. And it worked! The prices came down, more bottles were sold, and Coca-Cola made more money.
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