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An interesting observation on movie pricing and theater profits from
Science Blog:
Variable pricing of movie tickets could up profits
New research explains how movie theaters may increase profits by moving away from uniform pricing to variable pricing.
The study is being published in an upcoming issue of the International Review of Law & Economics.
Currently, consumers pay the same price for blockbusters and for flops, for a movie on the Fourth of July and for a movie on a rainy day in January, for a movie on Friday night and for a movie on Monday evening.
"We don't pay the same price for apples and oranges or for a hotel room on weekdays and weekends. There is no solid economic justification to charge one price for all movies, seven days a week, throughout the year," explains Barak Orbach, an associate professor at The University of Arizona's Rogers College of Law and one of the authors on the study. "Under the present pricing model of movie theaters, some money is left on the table."
While the authors recognize obstacles to variable pricing based on individual movies, they argue that premiums for event movies, on weekends and holidays and during the summer do not raise similar obstacles.
"Movie exhibitors would increase their profits by engaging in variable pricing," says Orbach. "The industry's argument that uniform pricing must be the best pricing model because it has always governed the industry is logically weak and factually wrong," argues Orbach, who in another article shows that, until the 1970s, variable pricing governed the industry.
It seems that the fixed pricing scheme was promoted by distributors so they could measure ticket sales by gate reciepts...
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Posted by DaveH at December 22, 2006 7:54 PM