They say ignorance is bliss.
And, when it comes to the price of movie tickets and popcorn, it most certainly is. Or, I should say, was.
For years, my wife has carried the Regal Cinema card in our family. So, when we go to the movies, she typically picks up the tab for the tickets and for my son’s popcorn and slushy.
But recently, we were running late. So, my son and I jumped out of the car and dashed into the theater while my wife hunted for parking.
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This, of course, meant I had to pay for the tickets and the popcorn and the slushy. Which I found to be surprising painful: $39 for three movie tickets. $6.29 for a small popcorn, $5.59 for a small slushy and $4.99 for a bottle of water. I was over $55 and none too happy about it.
Turns out, I’m not the only one. When I Googled, “Why does popcorn cost so much at the movies,” my houselights began to flicker and I think the Internet nearly crashed. I saw hundreds of articles and blog posts. One post has so many reader comments that I still haven’t scrolled all the way to the bottom. There’s even a 39-page academic paper from Stanford University that applies calculus and higher order derivatives to the problem.
So what gives? Hard to say for sure.
One school of thought blames the whole situation on what they call the Hollywood mafia. Greedy movie studios, they argue, take the lion’s share of the box office proceeds leaving the theaters with too little to operate. Therefore, exorbitant prices at the concession stand are the only way for the theaters to stay in business.
One theater owner wrote, “I’m not in the movie business, I’m in the popcorn business.”
Another line of reasoning argues that evil movie theaters are exploiting a captive audience. You can’t bring your own food into the theater, so if you want to eat, or make the kids happy, or impress your date, you have no choice but to pay the high prices. So too bad.
My take? From a business perspective, high popcorn prices make a ton of sense.
If the movie theaters raised ticket prices, they’d have to fork over most of that increase to the movie studios, and with higher prices, they’d lose even more business to the likes of Netflix, HBO and Cinemax.
Lowering the price of popcorn to attract more concession sales won’t work, either. Face it, you’re either a popcorn eater or you’re not. Two or three dollars off the price isn’t going to make healthy eaters ingest hundreds of empty calories or induce people to ruin their appetite for dinner.
And, if you are a popcorn-eater — or candy-eater, or a nachos-eater — a $2 or $3 gouge isn’t enough to dissuade you from the priceless pleasure of munching away at the movies. Who cares if the profit margin on that popcorn is 90 percent?
Like movie theaters, many companies rely on “aftermarket” sales to drive profitability. Think ink for printers, blades for razors, video games for consoles and monthly plans for mobile phones.
From the customer’s perspective?
Well worth the $55. And I’ll tell you this: Next time, I’m not getting the small popcorn. I’m getting the big tub. For only $2 more, you get nearly three times the popcorn plus a free refill. What a bargain.
Adam Snitzer is a revenue strategy expert and president of Peak Revenue Performance, a consulting firm that specializes in helping companies attract more, high-paying customers. He can be reached at firstname.lastname@example.org, or via the company’s website at PeakRevenuePerformance.com. He wrote this opinion piece for Business Monday in the Miami Herald.
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