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Saturday, June 18, 2011

Ticket Price Increases - The Lazy Way of Generating Income

Disney raises their ticket prices every year.  Everyone has come to expect it.  In fact it's so reliable you could set your clock by it.  However, is it a good idea?

Increasing the cost of tickets comes with a few problems.  First it annoys the Disney fans.  I'm not talking about the average family going to Disney World.  I'm talking about the fans who realize the the price of their annual pass keeps creeping up every year.

The second big issue is at some point you are going to hit a breaking point.  The day will come when the price gets to the point where attendance will decrease. 

The third issue is the simple fact that increasing the cost of tickets is lazy and there are better options that would provide more income without annoying people.  For example you could offer a $10 gift card with every ticket purchased.

At this point you must think I'm insane.  How does giving ten dollars away increase revenue? Let me explain.

The card cannot be used for food.  Some of you just caught on.  For the rest let me explain why that is so important.

What can you buy in Disney World that isn't food for under $10?  Almost nothing but people are going to spend that money.

The amazing thing is this is a glorified coupon.  Studies have shown that offering coupons make people spend more.  People think they are saving money but in fact they end up spending more a majority of the time.  People's mentality changes when they have a coupon.  Let me give an example.

Say you are selling a sweatshirt for $50 (that's not unheard of in a theme park).  The person who would like to buy it would never pay $50 for it.  In fact the person wouldn't buy the sweatshirt if it cost $40.  You leave the price at $50 but offer the coupon or in this case a gift for ten dollars.  The person will buy that sweatshirt.  Why?  Because they perceive that they are getting a deal.  If someone thinks they are getting a good deal they will spend more than they had planned.

Now you see why offering a $10 gift card generates a lot of income.  Sure there are going to be the savvy shoppers who go in and buy a pin or another inexpensive item but overall you are going to make a lot of money.

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