Summertime in New England means lobster — and this year, there's lots of it. With the abundance of lobsters in Maine this summer, prices that lobster fisherman receive at the docks have sunk to a 40 year low of under $2 a pound. (By comparison, last year dock prices reached $4 a pound.)
With cheap wholesale prices, consumers must be benefiting by paying less for lobster, right? Not necessarily. Yes, prices at Boston grocery stores have dipped to as low as $3.99 per pound. Similarly, a "Cantonese style" twin lobster dinner at a restaurant I frequent in Chinatown has dropped from $24.99 to $19.99. However, at my favorite upscale restaurant, prices have not budged — a lobster roll platter is still close to $30. Similarly, prices for picked lobster (meat removed from the shell) at retail outlets have remained constant too.
So what's going on here? Why are some businesses lowering their lobster prices while others aren't?
This situation illustrates a key pricing concept — value-based pricing — that all companies can learn from.
To read the rest of the story, please go to: Harvard Business Review
