I’d like to start with a quick update for those who have been asking why I seem to have dropped off the face of Earth with my commenting and what not… I left Friday afternoon for a trip to Disney World and just got back yesterday afternoon! I’ll be writing up a report and have some great post ideas from the trip but need a little bit of time to organize my thoughts.
Have you ever noticed that theme parks and movie theaters charge a LOT more for food and drinks than you would pay in any other setting? As I mentioned above, I just returned from Disney World and their concession prices reminded me of the sky high prices of concessions at movie theaters. Disney World vending machines charge $2.75 to $3.00 for a 20 oz bottle of soda. I can get the same soda from a vending machine in front of a grocery store for roughly half of that cost.
Why Do Theme Parks and Movie Theaters Charge More?
The answer should be fairly obvious but to get there I think we need to evaluate the answer to another question or two first. Do you pay these prices? Do you see others paying these prices? If the answer is yes to either of these questions you have your indirect answer. Movie theaters and theme parks wouldn’t charge these outrageous prices if people would not buy the items at their prices.
In fact, I’d be willing to go a step further and say that they likely optomize their prices so that they can make the most profit possible. I’d venture they test different prices in different locations and see how the product sells. A simple example would be at $1 they sell 100 sodas, at $2 they sell 90 sodas at $3 they sell 75 sodas and at $4 they sell 50 sodas. In this case they makes $100 at the $1 price point, $180 at the $2 price point, $225 at the $3 price point and $200 at the $4 price point.
In the above example the seller doesn’t sell quite as many sodas but they do end up maximizing their revenue. Obviously they would consider the cost as well and instead maximize profit but you get the idea.
So How Do They Pull It Off?
The reason why you pay these prices is the fact that you are a captive audience in these situations. At the movie theater you likely aren’t allowed to bring in outside food or drinks. They have the only option for concessions stand items if you don’t want to break the rules. Most people just accept it and pay the prices because the theaters have done the research to find the perfect price point to make the most money possible by pricing right below your maximum allowable wallet pain threshold.
The biggest factor is people don’t plan ahead when they know they’ll be part of a captive audience. As far as theme parks go, many people arrive at the parks and before realizing how high the prices actually are. By the time they figure out how much things cost in the park they don’t want to waste their precious time (theme park tickets aren’t cheap) traveling outside the park and just pay the prices on the menu board.
Most people don’t know you can do bring in outside food and drinks to some theme parks. Other people are lazy and some people are willing to pay the prices. Whatever the reason is, it works in favor of the theme park. I did see a few people eating food they brought into the park but I’d venture to say it was less than 10%. We personally fell in the last group for lunch and dinner. We wanted something hot and fresh so it was worth it to us. We budgeted for it and could afford it. We didn’t pay for drinks or snacks though. We brought and refilled water bottles and carried small filling snacks with us each day.
We knew we would be a captive audience and planned ahead for what we were willing to pay for. Do you buy concessions at the movies and theme parks? What do you do to save money and where do you budget for some extra spending money?