Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: discostu

Lowering prices would result in selling more candy, but it wouldn’t result in more profit. Look at it this way (using big round numbers to exaggerate the effect).

Scenario 1:

Sell 100 candy bars at $10.00 each.
Theater’s cost of each candy bar = $1.00.
Gross income - cost = profit: $1,000 - 100 = $900 profit

Scenario 2:

Sell 500 candy bars at $2.00 each.
Theater’s cost of each candy bar = $1.00.
Gross income - cost = profit: $1,000 - $500 = $500

Selling more product does not always mean more profits. In this case, the theater made $400 more profit by selling a few high priced candy bars than it would have by selling a lot of low priced candy bars.

This is another reason food is so expensive at theaters. It’s more profitable to sell a few expensive items, than to sell a lot of cheap items.


39 posted on 03/06/2012 6:19:57 AM PST by Brookhaven (Mitt Romney will right-size the economy--just like he did your job when he bought your company)
[ Post Reply | Private Reply | To 12 | View Replies ]


To: Brookhaven

It all depends on how many you sell. I know that as prices increase or decrease the number of customers varies. I doubt highly that if they dropped the prices to 1/5 they’d only see sales go up 5 times, I think they go up 10 times at least. Outside of the world of movie theaters candy bars are an impulse buy, one of the reason they’re an impulse buy is they’re dirt cheap, a functionally negligible amount of money for most of the populace even in these times. Movie theaters have pushed the price way past the impulse buy line, if you force your customers to pre-plan whether or not they’re going to buy a candy bar then they’ll probably pre-plan to buy it someplace cheaper and smuggle it in. Putting impulse items at impulse prices will dramatically increase sales.


40 posted on 03/06/2012 7:23:00 AM PST by discostu (I did it 35 minutes ago)
[ Post Reply | Private Reply | To 39 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson