This is from the “Accounting Makes Cents” podcast episode #58 released on Monday, 12 February 2024.
So welcome to Accounting Makes Cents, Valentine’s edition. As mentioned, Valentine’s Day is creeping up on us, and with it comes the classic symbols of love: roses and chocolates. But have you ever stopped to wonder why these goodies seem to cost an arm and a leg this time of year? In today’s episode, we’re going to look at the true price of romance, and touch on a couple of additional pricing strategies that happen during times like these. I know I’ve done one podcast episode before talking about common pricing strategies, and I’m pretty sure I did it during a Black Friday episode, so it seems like this is a common theme for me to talk about product pricing and strategies when a special occasion is upon us. I’ll provide a link to my previous episode on the show notes. Anyway, don’t worry, even though we’re touching on romance today, this podcast is going to steer clear of offering relationship advice. It’s not gonna be that kind of podcast.
Jump to show notes.
Valentines, chocolates and roses
So, let’s start. Let’s talk economics, shall we? Picture this: as February 14th approaches, everyone’s scrambling to snag roses and chocolates for their loved ones. As the demand for roses and chocolates skyrockets, so do their prices. But why? Well, it all comes down to the basic principles of supply and demand.
Now, here’s where things get interesting. Retailers are smart cookies. They know we’re suckers for tradition and romance, so they pump out ads left and right, convincing us that we need those dozen roses and heart-shaped boxes of chocolates to prove our love. And let’s be real, who wants to be the one who didn’t come through on Valentine’s Day?
With consumers clamouring for these romantic staples, retailers seize the opportunity to bump up the prices, knowing full well that people will still shell out the extra cash for that bouquet of red roses or heart-shaped box of chocolates.
History
Okay, let’s take a quick trip down memory lane. Valentine’s Day isn’t just a Hallmark holiday—it’s got some serious history. Like, we’re talking ancient Rome kind of history. But somewhere along the way, it morphed into this commercialised frenzy of roses and chocolates. Funny how that happens, huh?
So how did it all start?
Legend has it that Valentine’s Day traces its roots back to a raucous Roman festival known as Lupercalia. The Romans celebrated the coming of spring with feasting, frolicking, and a healthy dose of fertility rites. Yep, things got wild.
Fast forward a few centuries, we meet Saint Valentine, the patron saint of—wait for it—love and beekeepers. Now, there’s an unlikely combo! he defied an emperor’s ban on marriage and secretly wedded couples in love. Romantic rebel, right? According to the stories, he defied an emperor’s ban on marriage and secretly wedded couples in love. Romantic rebel that he is.
By the Middle Ages, Valentine’s Day took on a more romantic tone, thanks to poets like Shakespeare. But it wasn’t until the 19th century that Valentine’s Day truly blossomed into the commercial extravaganza we know and love today. The Victorians introduced their elaborate cards adorned with lace, ribbons, and—of course—cheesy love poems. And the rest, as they say, is history.
All this just means is that love is enduring and it’s hard to break tradition.
More pricing strategies
Now, let’s go back to the chocolates and roses. Let’s talk strategy. Retailers are like master chess players, strategically positioning their products to maximize profits during the Valentine’s Day rush. From limited-time offers to bundled deals, they pull out all the stops to entice consumers to open their wallets wider.
One common tactic is dynamic pricing. Imagine you’re browsing online for the perfect Valentine’s Day gift, and you stumble upon a gorgeous bouquet of roses at what seems like a reasonable price. But as you’re about to click “Add to Cart,” you notice the price suddenly jumps up! What gives? Welcome to the world of dynamic pricing.
Dynamic pricing is like a digital dance between retailers and consumers. Using sophisticated algorithms, retailers adjust prices in real-time based on factors like demand, inventory levels, and even your browsing history. So that bouquet of roses that seemed like a steal just a few minutes ago? It’s now a bit pricier, thanks to the surge in demand from other last-minute shoppers. Sneaky, right?
But here’s the kicker: dynamic pricing isn’t just limited to online retailers. Brick-and-mortar stores have been known to dabble in dynamic pricing too, especially during peak shopping seasons like Valentine’s Day. So the next time you’re out shopping for gifts, keep an eye out for those sneaky price changes—you never know when you might be caught in the crosshairs of dynamic pricing.
Then there’s the art of bundling. You know, those irresistible deals where retailers package complementary items together at a slightly discounted price? It’s like they’re saying, “Why settle for just roses when you can have roses *and* chocolates?”
Bundling is a tried-and-true strategy for retailers looking to move more merchandise while offering consumers a perceived value. After all, who can resist the allure of getting more bang for their buck? Whether it’s a bouquet of roses paired with a box of chocolates or a romantic dinner package complete with wine and dessert, bundles appeal to our desire to maximize our Valentine’s Day spoils without breaking the bank.
But here’s the catch: not all bundles are created equal. Some retailers may try to pass off lackluster deals as must-have bundles, so it’s important to read the fine print and compare prices before diving in. After all, you don’t want to end up paying more for a bundled deal than you would for the individual items separately. So, the next time you’re tempted by a bundle, ask yourself: is it really worth it?
But perhaps the most cunning strategy of all is the power of scarcity. Ever noticed how those heart-shaped boxes of chocolates seem to disappear from shelves faster than you can say “I love you”? It’s not a coincidence—retailers are masters at creating a sense of scarcity to drive up demand and create a frenzy among consumers.
Scarcity tactics play on our fear of missing out (FOMO), prompting us to act fast before it’s too late. Whether it’s a limited-edition Valentine’s Day collection or a special promotion with a “while supplies last” disclaimer, retailers know that scarcity sells. After all, who wants to risk being the one left empty-handed on Valentine’s Day?
But here’s the thing: scarcity tactics aren’t just about creating artificial shortages. They’re also about creating a sense of urgency among consumers, prompting them to make impulsive purchasing decisions in the heat of the moment. So the next time you’re tempted by a limited-time offer or a “last chance” promotion, take a moment to pause and consider whether it’s really worth the rush. After all, true love waits, right?
Conclusion
As a conclusion, while I won’t profess to know how to give relationship advices, I just want to say that, like many things, romance doesn’t have to come with a hefty price tag. Seriously! It’s all about the sentiments. A handwritten love letter or a homemade dinner can speak volumes more than a fancy bouquet or a box of chocolates ever could. It’s about the thought and effort we put into showing our love and appreciation. This kinda segues us into a different topic, perhaps dealing with financial and non-financial factors. But we’ll leave that discussion for another time.
Show notes simplified
In this episode, MJ the tutor explores how pricing strategies dictate the cost of dinners, gifts, and experiences during Valentines’ Day.
Resources and links from this episode:
MJ the tutor on Black Friday and the Pricing Psychology
MJ THE TUTOR 