Coffee and chocolate brands are heading into 2025 grappling with price increases – a tricky move during a cost-of-living crisis.
181st Street has been hired to help one brand navigate this: shifting them into a more premium market position while ensuring their customers continue to feel the value matches the price.
This isn’t just about numbers on a price tag; it’s about how people perceive those numbers.
Here’s how science says to approach it:
Pricing is Perception
It’s not the number that matters – it’s the context. Dyson doesn’t just sell vacuum cleaners; they sell cutting-edge technology, sleek design, and the promise of superior performance.
If you’re raising prices, elevate your brand story too. Whether that’s through limited-edition flavours, artisanal quality, or a premium unboxing experience, make sure the perceived value rises with the price.
Highlight Exclusivity to Justify Higher Prices
Exclusivity sells. Limited-edition releases, collaborations, or seasonal blends create a sense of scarcity that justifies higher prices. People are often willing to pay more for something others can’t easily have.
Packaging as a Signal of Quality
We often equate better packaging with better quality. When the price goes up, a premium-looking package subtly reassures consumers that they’re paying for something extraordinary.
Elevate the sensory experience with textured materials, metallic finishes, or resealable options that feel luxurious to the touch. Tactile packaging not only enhances the ritual of opening your product but also increases the likelihood customers will pick it up and perceive it as worth the price.
There’s compelling evidence that touching a product increases the likelihood of purchase and even a willingness to pay more. This phenomenon, known as the “endowment effect,” is a well-documented principle in behavioural economics. When people physically interact with an object, they begin to feel a sense of ownership over it – even before buying it. This emotional connection makes them value the item more highly than they would if they hadn’t touched it. And once someone has touched or held a product, the prospect of losing it becomes more painful (loss aversion). This increases the likelihood of purchase to avoid the discomfort of giving it up.
When prices rise, packaging becomes your silent negotiator, convincing customers that the increased cost isn’t just justified – it’s desirable.
Create Emotional and Ritual Value
Coffee and chocolate are rarely “just” products. They’re moments. Tie them to rituals your audience cherishes.
Rituals resonate because they give us comfort and meaning. Whether it’s a morning mindfulness moment, an afternoon reset, or an evening indulgence, make your product part of these stories. This emotional connection makes customers less price sensitive.
Use Anchors to Smooth Transitions
Introducing a premium product tier before raising baseline prices can ease the sting. The higher price serves as an anchor, making modest increases seem reasonable.
This classic behavioural strategy (think Apple’s Pro models) helps your audience feel like they’re getting a better deal on the “regular” offering.
Frame the Price Increase as a Gain, Not a Loss
Reframe the price rise as a gain rather than a loss.
Instead of: “Due to rising costs, we’ve had to increase our prices.”
Try: “To ensure we continue to deliver the best flavour and quality, we’ve made enhancements to our sourcing and packaging.”
This subtle shift in messaging reframes the focus from cost to value, positioning the price rise as a customer benefit.
Tell Stories, Not Prices
When people know who made their product or can envision the people and stories behind it, they’re often willing to pay a premium.
Knowing that a specific farmer, chocolatier, or roaster made the product makes it feel personal and special. Including a handwritten note, a photo, or even the name of the maker communicates authenticity, which consumers value immensely.
When customers feel a connection to the person behind the product, it transforms the act of consumption into an emotional experience. This emotional resonance justifies a higher price – because they’re not just buying coffee or chocolate; they’re buying a relationship, a story, and a sense of belonging.
But be careful – don’t lean too heavily into transparency about rising costs. Framing it as a resilience story (“We’re ensuring every cup stays exceptional”) is far more compelling than a lament about the rising cost of beans.
For beloved staples in saturated categories like coffee and chocolate, protecting the emotional why behind your brand is non-negotiable.
After all, people don’t just buy products – they buy into the stories, feelings, and meaning behind them.
When prices rise, it’s not just a financial transaction – it’s an emotional negotiation.
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