Why does a simple cup of coffee cost Rs 150 at Cafe Coffee Day (CCD)?

Answer by Siddhartha K. Rastogi:

They don't sell coffee. Coffee is incidental to their business. What they sell is a meeting spot in a commercial hotspot, AC, relaxations, and an opportunity of conversation. All this does cost a lot, though not worth 150-200 perhaps.

But the pricing is also driven by – are you willing to pay 200 for a meeting spot + … ? This is called willingness to pay in simple terms and originates from the theory of revealed preference.

Tim Harford has written about it in his book, The Undercover Economist, in the chapter titled "Why does coffee cost so much at the airport?"

Why does a simple cup of coffee cost Rs 150 at Cafe Coffee Day (CCD)?

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