Lobster prices plunging, but not for you

The price a restaurant or grocer pays for food determines how much you’ll pay at a restaurant. That’s what most people think anyhow.

What if someone told you that the price you’re paying for a particular type of food is actually a reflection of what you think you should be paying? It's hard to believe, but it happens.

One such example is lobster. While the price of wholesale lobster is plunging, restaurants are still charging premium price for the delicious seafood treat.

A glut of lobsters has slashed the price of fresh lobster in Maine from $3.19 a pound in 2011 to $2.20 a pound in Aug. 2013, according to reports by MSN Money and The New Yorker.

Despite the falling prices, you can still expect to pay:

  • $15 for a true lobster roll sandwich at many eateries
  • $14 to add a lobster tail to any meal at Red Lobster
  • $25 for Red Lobster’s ultimate feast dinner -- or lobster, crab and shrimp

The report indicates that any dish with lobster added, such as risotto or ravioli, also remains more expensive than similar items even though the cost to purchase them from a wholesaler may be the same.

So, why is this the case?

It's simple -- or, actually, it's not simple at all, really. In actuality, it seems many restaurants aren’t changing how much they’re charging for lobsters because consumers perceive it as a luxury good, according to James Surowiecki in his article "Clawback" in The New Yorker.

In short: If the price were to drop, some of the appeal of lobster would be lost. And believe it or not, some people might stop buying it.

This phenomenon is summed up in a study that was published in the Journal of Marketing, according to the Collective Publishing Company Inc., a social media marketing company.

In the article, the author defines two groups of wealthy individuals. One group, the "patricians," are "truly wealthy" and do not need status for validation. They do not want or need to be identified with a brand in order to feel successful.

Their counterparts, the "parvenus," are the exact opposite.

They are also wealthy, but they are in need of status to indicate that they are part of the affluent group, according to the article. Thus, they buy bold, logo-filled goods.

It's all about the butter-dipped perception.

It seems like people are willing to pay to feel as though they’re tasting the good life.

As always, don't waste your money.

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