Flawless Cocktail: Flawless Pricing at £35,000

We at VeraSage love examples of pricing that defy the calculus of any pricing consultant. Items such as the $1,000 omelet, $100 hamburger and $1,000 pizza have all been written about before.

Thanks to Paul O’Byrne—who is feeling much better from his second round of chemo, as he wrote on his blog Thursday—for letting me know about this most recent example.

The London nightclub Movida nightclub is offering the world’s most expensive cocktail, named the Flawless. Here are the ingredients:

The cocktail consists of a large measure of Louis XII cognac, half a bottle of Cristal Rose champagne, some brown sugar, angostura bitters and a few flakes of 24-carat edible gold leaf. The drink is described as warming and refreshing, but that is not the main reason for the exorbitant cost: at the bottom of the crystal glass is an 11-carat white diamond ring.

I don’t know about you, but the fact that it contains an 11-carat white diamond ring at the bottom of the glass actually diminishes its perceived value (sorry Michelle; and no, you may not have one at VS expense).

This made me think of two points. First, establishing a true Value Price is much more difficult than simply grinding endless equations. Those may be helpful, but at best you will end up with something that is precisely wrong.

If you believe value is subjective—and we at VS, like the Austrian economists, fervently do—then running regression analyses of historical supply and demand equations is no way to seek what something is truly worth to someone else. I realize companies have to do this, but it doesn’t mean it’s accurate.

The second point is on some of the comments written about this cocktail being nothing but conspicuous consumption by the super-rich (and super-dumb). These two comments are my favorite:

“It’s like sticking two fingers up at the rest of society,” said the Labour MP Sion Simon. “You might as well set fire to your money in front of those less well-off. It’s a very deliberate way of saying ‘We are not part of the same country as you.'”

The drink will appeal to “the stupid segment of the super-rich”, said the social commentator Peter York. “It is so gauche, so crashingly crass, that everyone else will see the buyers as barely literate, as one step up from a potato.”

Sure, £35,000 exceeds the annual income of approximately three-fourths of the workforce in the UK. So what? Wealth doesn’t cause poverty. In fact, wealth is the only antidote for poverty.

What would you rather the super-rich spend their money on? Food you eat, housing you desire, automobiles you want to drive, or other wants of the middle-class, thereby driving up their prices?

We want the rich to blow money on things like this, and not bid up the prices of those items the rest of us want.

I remember reading in Robert Frank’s book, Luxury Fever, about how our spending on luxury goods is growing four times as fast as overall spending, thinking again, so what? Isn’t that a sign of prosperity? He also tells this story:

The barstools aboard the late Aristotle Onassis’s yacht, The Christina, were covered with the buttery soft—and jarringly expensive—foreskin of the sperm whale penis.

Good. Better he spent his money on things the rest of us can’t than on those items within our reach that we desire.

Stanley Marcus, son of one of the founders of Neiman Marcus, invented the His and Her Christmas gifts, that still make headlines to this day. But he also did something else incredibly smart from a pricing perspective.

He would include in his catalog and stores gifts costing no more than $50, realizing the halo effect the catalog created. Brilliant marketing, and pricing.

Three cheers for the Flawless cocktail, a fine example of why value is subjective (yes, they’ve already sold some).

Let’s see if they provide a mini-version of the drink, for say, £5,000. I’m sure it would do well (again, no Michelle).

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