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?
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 $3.00 or more 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 wouldn’t buy the items at their prices.
What’s even crazier are the prices Disney World charges for parking both on the resort and at the theme parks. While you can technically park at Disney Springs to avoid theme park parking costs, it’s a major pain. What you’re paying for is convenience.
I’d be willing to go a step further and say they likely optimize 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.
Here’s a simple example of how this works. The seller would test a different price for their product on each day. On day 1, they sell 100 sodas at $1 each. On day 2, they sell 90 sodas at $2 each. On day 3 they sell 75 sodas at $3 each. Finally, on day 4, they sell 50 sodas at $4 each.
In this case, they make $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 at the $3 price point.
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 the high prices because the theaters have done the research to find the perfect price point to make the most money possible. They price 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 people figure out how much things cost in the park, they don’t want to waste their precious time traveling outside the park and just pay the prices on the menu board.
Sadly, 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 decided to pay the high prices and eat in the park for lunch and dinner. We wanted something hot and fresh so it was worth it to us. They key is, we budgeted for it and could afford it.
We didn’t pay for drinks or snacks though. We brought our own water bottles and refilled them when they were empty. We also carried small but filling snacks with us each day. These two tricks saved us at least a few dollars 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?
Lance Cothern, CPA holds a CPA license in Indiana. He’s a personal finance, debt and credit expert that writes professionally for top-tier publications including U.S. News & World Report, Forbes, Investopedia, Credit Karma, Business Insider and more.
Additionally, his expertise has been featured on Yahoo, MSN, USA Today, Reader’s Digest, The Huffington Post, Fast Company, Kiplinger, Reuters, CNBC and more.
Lance is the founder of Money Manifesto. He started writing about money and helping people solve their financial problems in 2012. You can read more about him and find links to his other work and media mentions here.
Erik
Friday 17th of May 2013
Here is the proof that regardless of what the collective consensus of the public is, NOTHING is going to change how businesses operate. Movies can charge hgh prices because they know people WILL go see interesting movies, and people can't sit n a movie theater for 2-3 hours without something to drink. Because you can't bring it in with you, they pretty much have you by the nuts, and they KNOW that, those, they don't care what we say. Because supply and demand is so crucial to the capitalist concept, there will always exist businesses who will take advantage common people because they know no body will do anything about it, or regulate the cost structure until it becomes so evident that Congress will have to get involved and regulate the ceiling ( just like what happened Immediately after Katrina). As you will see, even after this has been posted, 1 year after the original post, years from know it wil always be the same and the only thing Americans can do is bitch about it and still spend $10 for a lousy hot dog. So what can you do??????
Erik
Friday 17th of May 2013
By the way, this concept obviously applies to airports, theme parks and cruise ships as well. "captive audience" is the key word here, therefore it is by definition, a Monopoly on your location and time.
Miss T @ Prairie Eco-Thrifter
Tuesday 4th of September 2012
These things are crazy expensive. We usually buy the Costco vouchers that you can get. They help save a fair few pennies.
Or we bring our own stuff if we can. I know at a baseball game we went to not long ago, we could buy water for a $1 just outside the gate compared to $4 inside.
Lance
Tuesday 4th of September 2012
I remember a similar thing with a bottle of water at the Nationals baseball park.
sleepydad
Friday 31st of August 2012
Yes - we were down in San Diego's Sea World in June and found the food to be quite expensive. There is a way to save money. I didn't do this, but a hotel staff member said to us that Sea World offers a "ALL DAY DINING" deal. Cost is $32.99 per adult; $15.99 per child (3-9). The the deal, you have access to all the participating restaurants onsite. A good deal, is when one adult pays; then gets food for the entire family. Yes cheating the system; but when you are paying $68 per adult and $60 per child for admission, give us a deal!
Lance
Monday 3rd of September 2012
Cheating the system is tricky and some wouldn't do it. I probably wouldn't do it either but some have no problems with it.
[email protected]
Thursday 30th of August 2012
My husband LOVES movie popcorn. For the three times a year we might go to the movies, we usually get some, even though it has a gazillion calories. The last time we went I did talk him into making popcorn at home and we snook it in by hiding it in my purse. It went pretty well. We will probably try that again. We do theme parks so infrequently, we would probably buy food there as part of the trip. We went to a major league baseball game this summer and bought food but packed drinks. No need for a $4 bottle of water or soda.
Lance
Monday 3rd of September 2012
Movie popcorn IS amazing. We make it at home when we watch movies.
Michelle
Thursday 30th of August 2012
We usually pack a lunch, leave it in a cooler in the car and head out for a little picnic around lunchtime. You can bring water everywhere. I mean, they might say "no food or drinks" but seriously, it's inhumane to not let people bring water into places when it gets so hot at those places.
Lance
Monday 3rd of September 2012
We thought about this but that would require us to drive to the parks (a pain when you can ride the free transportation) and then it takes a while to get out to your car because the parking isn't right next to the park (you have to take trams or the monorail).