Thursday, February 10, 2011

Lifetime pricing?

I totally stole this fact from Wine Peeps, but this is fascinating. Rotie Cellars is offering "Lifetime Pricing" on his wines to his club members. As he explains on the site:

Revolutionary “Lifetime Pricing” perk given to all Rotiesians who sign-up during the first year of The Club. This means as the world changes and our prices grow, your price stays the same.

He goes on to say that it's for a limited time, sign up while you can, yadda yadda (might be a good idea; the Rotie wines are pretty killer). But the sheer chutzpah of this incentive boggles this not-so-humble blogger's mind. I can't decide if it's genius, madness, or mad evil genius. On the one hand, it's a pretty strong incentive to buy. Short-term, I could see a lot of people signing up to be dedicated customers because of this offer. That's a lot of guaranteed wine sales - something that an up-and-coming winery like Rotie definitely needs as they try to stay afloat and expand. So if it's successful, this is the sort of thing that could keep him in the black right now.

However, one has to wonder whether it's penny-smart and pound-foolish. As time goes on and economic growth drives the dollar towards inflation, will this prove to be a money loser? Ten years from now, $35 undeniably won't get you what it used to - unless you've got Lifetime Pricing with Rotie Cellars, in which case it will buy you exactly what it used to. Does this affect the value of his wines by unnaturally undervaluing them, even if just for these few dedicated customers? Beyond that, should they want to expand their facilities, buy new equipment, and generally spend more money on the production of their wines, will Rotie Cellars be stymied in these efforts by an inability to raise their prices accordingly?

I don't have the answers to these questions, but contemplating them certainly is interesting.

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