Costco has charged a dollar fifty for the same hot dog and drink since 1985, and it loses money on every one it sells.
That is not an oversight anyone forgot to correct. Put the price through inflation and it should be sitting near four dollars fifty today. Costco has watched a recession, a housing crash, a pandemic and the worst inflation in forty years walk past the food court, and left the sign exactly where it was. The current chief executive has said plainly that the price is not moving while he has the job, which is a remarkable thing to promise about a sausage.
Here is the part most brands miss.
The hot dog is not food. It is a public promise with a price tag on it, set so low that nobody has to take Costco’s word for anything. Think about what a warehouse club is actually asking. Pay us an annual fee, up front, before you are allowed to buy so much as a battery. That is a strange request built entirely on trust, and trust is exactly the thing a discount retailer cannot claim about itself without sounding like a used car advert. So Costco answers it in the car park instead, for a dollar fifty, before you have committed to a thing.
Every business has one of these prices. It is rarely the flagship. It is the delivery charge, the returns policy, the cost of a spare part, the small visible number customers quietly use to work out whether you are decent when nobody is watching.
And this is where somebody arrives with a spreadsheet. In isolation each of those lines looks like money leaking out of a bucket, and it is genuinely tempting to tighten them. The error is treating your most visible price as a cost to optimise rather than a signal you are broadcasting to everyone who has not bought from you yet.
Raise the delivery charge by two pounds and you will find the two pounds. You will never find the customers who quietly decided you were the sort of company that does that.
The dollar fifty hot dog is not a cheap lunch. It is the cheapest advertising in American retail, and it only works because Costco has never once flinched.