The Enduring Enigma of Costco's $1.50 Hot Dog and Soda Combo -- The price hasn't changed in 35 years - what kind of sorcery is that?
When Costco president W. Craig Jelinek once complained to Costco co-founder and former CEO Jim Sinegal that their monolithic warehouse business was losing money on their famously cheap $1.50 hot dog and soda package, Sinegal listened, nodded, and then did his best to make his take on the situation perfectly clear.
"If you raise [the price of] the effing hot dog, I will kill you," Sinegal said. "Figure it out."
Taking his words to heart, Jelinek—who became Sinegal's successor in 2012—has never raised the price on Costco's hot dog. Incredibly, it has sold for the same $1.50 since the retail club first introduced the dogs to customers in 1984. The quarter-pound, all-beef tube and 20-ounce soda combo appears to be inflation-proof and immune to the whims of food distributors. How does Costco do it?
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Simple. When it comes to hot dogs, Costco doesn't price according to what the market will bear. They price according to their own cost and according to the value the hot dogs can afford them.
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