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Are Rotisserie Chickens a Bargain?

Stashed in: Awesome, Costco, Meat!, Consumers, Context, Freakonomics, Pricing!

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I had heard that Costco sells them at cost to get people to come to Costco.

Loss leader, yesh!

Is that in the priceonomics piece or should I find a different article that says that?

Well, er ....

Why is rotisserie chicken so cheap? The Internet is full of posts wondering about this, and positing theories. One goes like this: Rotisserie chickens were about to pass the sell-by date in the refrigerator aisle, and the store recoups most of that money by cooking them. Another that has more credence: They’re a loss leader to bring people into the store to buy other things. To some extent that’s true, though stores don’t generally lose money on them. 

But neither scenario tells the real story.

Which is this: In most stores, the cooked chickens aren’t any cheaper. They just look cheaper. The per-chicken price favors the deli counter, but the per-pound price favors the refrigerator case.

Perception of cheaper brings them into the store.

That's frightening. We all fall for it.

Cost is all about what you're comparing it to. If you're comparing part of a rotisserie chicken + a head of lettuce to 3 days of eating lunch out at a restaurant... hell yeah it's cheaper. If you're comparing it to lovingly roasting an organic bird in your own gourmet kitchen on your own time with a full stick of butter and a cut up lemon and a sachet of herbs as recommended by Simon Hopkinson... still probably cheaper if you place no value on pleasure or your own labor. If you're comparing it to buying the cheapest chicken you can find and throwing it in the oven with maybe a shake of salt, I'm guessing you come out even. If you're comparing it to not having a fully working kitchen, like you are homeless or very poor or only have a microwave in your room or don't know how to cook... you don't have enough life experience to know what you're talking about.

One of the most fascinating things about economic thinking to me is that people seem able to grasp the idea of "the marginal value of a dollar" in the abstract but they don't see that every commodity has a different value to an individual based on context. The marginal value of a rotisserie chicken shows that context pretty clearly.

That's an excellent point. Context matters and the concept of bargain depends. 

It's a conspirotissery.

We accept conspiracy as long as it's delicious. 

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