Why bother buying Girl Scouts cookies? Aside from being delicious, Girl Scouts cookies can teach us a lot about non-profits and how cookie sales work. Who would have guessed that a troop from Eastern Oklahoma all the way back in 1917 could have created a legacy that would become synonymous with “doing the right thing” or “donating to the right cause”? Well, that’s exactly what happened 100 years ago when a small Girl Scout troop started to sell cookies in order to pay for training, outings, and other events that teach young girls how to be productive members of society.
First, here is some history about Girl Scout cookies. Girl Scouts Cookies wasn’t the original name... They term was first used in 1933 on the streets of Philadelphia, which is just one more reason for me to write this (I hail from the Philly area). About 2 million Girl Scouts participated in this past season’s cookie sales, which start in February and stretch until March. For an average season, these cookies bring in about $800 million for the troops, councils, and the national body; this money flows to many different operations throughout the Girl Scouts. There are 112 councils in the United States that have an independent ability to price the cookies. This works a little bit like federal, state, and local government. Councils operate like the state level, having many troops (municipalities) within them.
Cost of Cookies
Girl Scout cookies sometimes experience price hikes. Councils in Massachusetts, California, Hawaii, and Arizona have the highest price rises which are likely due to their cost of living. Like I said before, the councils have discretion about how to price their cookies because they are supposed to have better insight into demographics, etc., but the interesting thing is that Girl Scouts cookies are an incredible example of inelastic demand. Inelastic demand is when the price of an item doesn’t directly change the demand for the item, meaning that you can charge more for something and still get the same number of people buying it. Demand is usually inelastic for products with few substitutes; gasoline is a good example. You’re going to need gas to go to and from work so you will likely purchase it at whatever the price per gallon is. Girl Scouts cookies recently underwent a 25% price hike but that price results in only 10-15% fewer customers purchasing the product, which means that this demand is relatively inelastic.
If you’re a business, you want to be selling things with low elasticity because then your product is unique and serves a purpose. It also protects you when your inputs rise in price and you are forced to charge more for your product. There is another economic principle that Girl Scouts cookies rely on as well. Behavioral economists have found that consumers are more likely to purchase an item to provide instant gratification rather than wait for a greater value or payoff in the future. Girl Scouts cookies are presented to you in a way that pretty much requires you to get them immediately. You can order them and have them delivered, but you can also purchase them at a booth. Most of these sales occur around the booth. It’s said that consumers make a purchase decision in just seconds after seeing the product. Cookie sellers use this to their advantage. If you don’t buy the Girl Scouts cookies, you’ll feel guilty for denying them the funds for their next camping trip. In the grand scheme of things, these cookies are more expensive than your other options. Here is a breakdown of the cost per cookie.
Based on demand, here is a list of which cookies are the most popular.
There is also a lot of competition and strategy that goes into selling these cookies. The GSUSA (the federal government from our earlier example) has developed an application that allows you to see the closest location to purchase cookies (again playing into instant gratification). One council in Seattle tracks the sales from each location they set up to determine the best location.
Where do the profits go?
How the money is distributed is the most interesting portion of this. None of the money goes to the GSUSA (federal group). The GSUSA makes money through licensing out their brand to other groups that want to use their name. They also make money from training costs that volunteers must pay.
This is the best profit breakdown I could find in my research. This is in line with a few other sources that I had found. As you can see, only about 20% of that box goes to the troop, but the council does help to pay for trips and things for the Girl Scouts, so it’s not as if one group is profiting from the hard work of selling the cookies more so than any others. At the end of the day, you’re helping invest in your community. You can also use the donation as a tax write-off if you leave the box of cookies with the Girl Scouts. They give these boxes to emergency service workers, national guardsmen, and others that help out in the community. The next season will start in February, so get ready!
Sources:
Cassuto, Dan. 2017. The competitive world behind selling Girl Scouts cookies. Match 10. http://www.king5.com/money/consumer/location-matters-even-for-girl-scout-cookies/421572010.
Euvino, Steve. 2017. 100 Years of Girl Scouts Cookies sales. March 11. http://www.nwitimes.com/news/local/lake/years-of-girl-scout-cookies-sales/article_92d49380-77ed-5e52-a84b-86b87bb17f1f.html.
Girl Scoutss of America. 2017. FAQ. http://www.girlscouts.org/en/cookies/all-about-cookies/FAQs.html.
Harrison, Olivia. 2017. Girl Scouts Cookies Are About To Get More Expensive. January 11. http://www.refinery29.com/2017/01/135714/girl-scout-cookies-price-increase-2017.
Reporters, Staff. 2017. 2017 Girl Scouts Cookie season begins Feb. 4. January 26. http://www.tulsaworld.com/communities/wagoner/news/local/girl-scout-cookie-season-begins-feb/article_ab8bd2db-5202-5db5-bd41-bad41b46a33f.html.
Rong-Gong Lin II, Rosanna Xia & Jon Schleuss. 2015. Girl Scouts cookie economics: Samoas most expensive, Oreos cheapest. March 5. http://www.latimes.com/local/lanow/la-me-ln-girl-scout-cookies-compare-20150304-htmlstory.html.
Schwartz, Elaine. 2017. Girl Scouts Cookie Economics . January 14. http://econlife.com/2017/01/girl-scout-cookie-sales/.