# How Much for a Margarita?

(Photo: Ralph Daily)

I was at a restaurant the other day which had an interesting feature: the two menus they gave us listed different prices for the same items. One menu quoted \$12 per margarita and the other offered the exact same drink for \$11.

For a split second I wondered whether the restaurant was carrying out some sort of pricing field experiment. I’m pretty sure, though, that wasn’t the case. Just regular old incompetence, I suspect.

I wouldn’t usually pay \$11 or \$12 for a margarita, but I was so curious in this circumstance that I went ahead and ordered one. (Well, actually, I ordered three by the time I was done.)

What was the true price? Strangely, it turned out not to be \$12, or even \$11. They charged me exactly \$7.94 per drink.

Luckily, I didn’t know that in advance or I might have had a fourth margarita, which definitely would have been a bad idea.

#### Bryan W

Hmmm, it actually sounds more like they charged you \$12 (\$11.91) per margarita, but then just accidentally charged you for two instead of three. Or perhaps the tequila was so strong you only ordered two, but THOUGHT you ordered three :-)

#### todd

Actually, I think what happened is that you were the beneficiary of a 2 for 1 or a buy 2 get 1 free special, and the price per drink was \$11. Here is the math:

2 drinks paid for at \$11 = \$22. Tax rate of 8.25% added equals \$23.815, which rounds up to \$23.82. Divide that by 3 and you get back to your\$11.91 per drink average price paid!

You should have ordered the 4th, it would have been "free".

Cool story bro.

#### Steve Nations

I suspect that they pull this trick on all the economists who visit their restaurant in an attempt to get them to order the items that are priced differently. It seems to work.

#### Clancy

Just added to my list of dream jobs:
Bartender at Economics conferences.

#### Drew Hanessian

Are you kidding? Tips would be horrible.

#### anon

So what is the punch line? Did you ask the waiter or waitress for an explanation? Curious minds want to know!

#### Dynise Basore-Ranfagni

From the peanut gallery (ie a server and former bartender)...My (educated) guess would be that they were in process of a menu change and there was an errant old menu with an inaccurate price-a simple mistake, not necessarily incompetence, and that there was likely some sort of promotion that was going on such as Happy Hour or Taco Tuesday or some other such thing. Two reasons for thinking this...ending prices in .94 is not normal in the industry and that significant of a price difference is likely a promotion.

#### Greg

This brings to mind terrifying thoughts of Time-Differentiated Pricing or Demand-Responsive Pricing made possible whenever restaurants move to digital/electronic menus.

#### Bob

Does anyone else think it is funny that the photograph accompanying this article (where the author ordered 3 margaritas) is "Ralph Daily"?

#### tkw

Where did you get them?

When margaritas are done with fresh juice, cointreau, and good tequila, they may be expensive. But also really good, and worth it. As you discovered.

#### rdk

One of my favourite things about visiting the US were the cheap margaritas everywhere. \$12 - nearly Australian prices!

#### MITBeta

There is a pizza place near my house that lists "gourmet" pizzas, one of which is a Hawaiian (pineapple and ham), for \$13.50. You can also get a large pizza for \$11 plus 50 cents per topping. One day I called up and ordered a large, 2 topping with ham and pineapple. When I went to pick it up the guy rang it in as a Hawaiian. I held my ground in insisting that I did not order a Hawaiian, but rather a 2 topping. He conceded.

In the future I'll just order pineapple and BACON instead...

#### jason

So what's the point of this story?

#### Bruce Dewald

I had an uncle who ran a grain elevator, back in the 70's. He had a sign up that advertised gloves for sale. The sign said \$3 per pair or 3 pair for \$10.

He said no one bought 3 pair for \$10, but a lot of people came in and bought one pair for \$3 just to tell him that he made an error on the sign. He did it just to see if people would notice and he had an odd sense of humor. His sales of gloves went up because of the sign and he left the sign up for years.

Maybe the two different and exorbitant prices was the hook to sell more drinks to the curious, or those who wanted to point out the error, but would be embarassed to do so without ordering the drink. It sure worked on you!