Dennis, the random number generator

Or... ways to sell wine for more money

It’s time for a new post from the hugely popular “Wine Marketing Masterclass” with hundreds of paid subscribers. An MBA-style course in wine marketing for people in the business, doing exams, or simply fascinated in how the wine business works. We’re currently coming to the end of “Price” in the “4 P’s” of marketing. And next we’ll move onto “Promotion” or Communications.

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My last job as a wine merchant was in a 17th century building opposite St James’s Palace in central London. We would see (the then) Prince Charles and the Duchess of Cornwall waft past with police outriders. The office itself was a tourist attraction.

But my wholesale career began on an industrial estate in Glasgow’s Gorbals, the setting for the novel “No Mean City” about “hard men and razor gangs”. A customer once cancelled a meeting because they’d found “a dead terrorist” in their toilets. Special Branch took a keen interest in why I was meeting another customer. And our Christmas staff party ended in an attempted murder. (Yes, the staff party.)

I learned more about wine pricing… and life… in the second than the first.

In St James’s Street we sat quietly at smart desks. In the Gorbals we all sat round a big table telling jokes. Dennis - an old hand - would put together pricing proposals. As he finished them he would go through all the prices randomly changing the last two numbers. His margins were higher than everyone else’s.

Why?

It wasn’t because he’d added a few pence.

Price is a feel­ing 

Price isn’t an ob­ject­ive fact. It’s a feel­ing. Char­ging £15.00 sug­gests - subliminally - you thought of a price most prof­it­able to you. Char­ging £15.87 sug­gests that there was a very spe­cif­ic cal­cu­la­tion. One that took into ac­count the cost of the wine, the delivery, storage, a meas­ured ap­proach to reas­on­able mar­gins... And that you’ve stuck re­li­giously to the process, rather than round­ing it up to make a bit of ex­tra cash for yourself. Like those bastards who charge £15.00.

Oh the irony of Dennis’s random numbers.

These sort of pricing nudges - and we’ll go through the most powerful ones below - falls

in the realm of Behavioural Economics. Here is me talking about some of them as part of the Nudgestock Festival in 2021 organised by Ogilvy and

Rory Sutherland

.

But what is sometimes called Behavioural Economics or Behavioural Science is often also called street smarts. As a wine merchant, that’s where I first saw how effective it was.