Starbucks Cuts Some Prices, Raises Others

Consumers ask themselves: How much is my latte worth?

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Starbucks announced this week that it will raise prices by up to 30 cents on its more complex concoctions, such as Frappuccinos, while lowering prices on simpler drinks, including drip coffee and tall lattes. Those will go for about 5 to 15 cents less. With an eye on the recession, the company is also emphasizing cheaper drink options on its menus.

While coffee bloggers have greeted this news with excitement over the fact that for the first time Starbucks is lowering prices on some items, the question of how the changes will affect buying behavior is yet to be determined. Is a dime's worth of savings, or extra cost, enough to sway anyone who is already willing to pay $3 or more for a drink?

Usually, I think most consumers would barely think twice about that amount of money. But surveys continue to show that we are hyper-aware of every dollar—or dime—leaving our wallets. A recent survey by the National Foundation for Credit Counseling found that more than four in 10 consumers are taking their lunches to work in order to save money, and seven in 10 said they would feel more financially secure if they had less debt. The financial crisis has made many of us as thrifty as we remember our grandparents (or great-grandparents) being. That's one reason why Starbucks has had such a rough winter and spring, with share prices falling and only recently beginning to pick up again.

Here's my prediction for what kind of effect the Starbucks price changes will have: The company will see a slight uptick in orders on its simpler drinks, while people who were already paying more for the complex ones won't dial back on their spending. As for my own habits, I'll switch from the grande to the tall latte if it means I'll save an extra dime.