When I started at my current company, they had free Starbucks coffee ("free" in the sense that you didn't have to pay to drink it; presumably they were recouping their costs elsewhere, most likely in employees' salaries). The bought it ground up in bags and they had coffee makers. Someone had to make it, but it was free to drink.
Then about 2-3 years ago, as part of a cost-savings, they switched from Starbucks to "Green Dragon" coffee, which frankly, sucked. My boss is something of a coffee "connoisseur" so rather than drink the free coffee, he decided he wanted to start buying his own (high-quality) coffee to make instead. Because he was making it by the pitcher, he decided to start a coffee club so that other people who wanted to drink "good" coffee could do so.
Now one way to handle this would be to, say, charge everyone $0.25/cup. Anyone who wants a cup can get one as long as they put a quarter (or whatever amount) in a jar.
But my boss is very, very "progressive". He doesn't like big corporations "nickel and diming" people. So rather than charge per cup, he decided to charge everyone a fixed price per calendar quarter so that he was recouping his costs, but your payment was not in any way proportional to how much coffee you drank. If you drink one cup a quarter, you pay the same as someone who drinks 5 cups a day.
Can you guess what happened? Every single quarter when he's asked for payment, it's been more $$ than the quarter before. And every quarter – as the price rises – fewer and fewer people opt-in for that quarter, and they are presumably switching back to the crappy Green Dragon that the company still offers for free. These are probably the people who weren't drinking that much coffee and so didn't see it as a good deal to stay in the club as the price rises. Which leaves people who do drink a lot, which means that the per-capita cost rises, etc.
What's really interesting about the whole thing is that there is another approach that is used by coffee clubs throughout the world – that is the pay-per-cup approach. And this approach – at least as far as I know – doesn't seem to have the same price-spiral effect that my boss's pay-one-price approach is exhibiting.
Conclusions are left as an exercise for the reader...
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