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I finally registered on HN to make one short comment: Read "Why Popcorn Costs So Much at the Movies: And Other Pricing Puzzles". It's a short, readable book on

I finally registered on HN to make one short comment: Read "Why Popcorn Costs So Much at the Movies: And Other Pricing Puzzles". It's a short, readable book on pricing "for dummies" by Richard McKenzie (UC Irvine). I have zero formal training in economics, and I found the book enlightening. It discusses price discrimination thoroughly - after all, it's a critical component of pricing theory. I, too, find the thought of one buyer paying more simply because s/he can afford the price somehow "wrong". I don't fully buy the explanation in the book (mainly revolving around time opportunity costs, as I see it). But, at the same time, life is not always fair - morality and money are orthogonal to some extent. If this behavior were deemed harmful by society, surely it would be illegal by now? [Edit: Minor Engrish nit.]

JimmyL 17y ago
re: Popcorn - I haven't read the book, but I have helped run a movie theater. The answer, if you're not going to read it, it that popcorn (and the associated food products) is how the theaters make their money. Sure, your ticket price contributes, but it's mostly to cover their constant labor and facilities costs. If a movie theater schedules a showing, it has to run - doesn't matter if there's 2 or 200 people in the theater at the time. The labor to run the show is scheduled far in advance, and represents a sunk cost to the theater. That cost is seen by theater management as the cost of getting people into the building. Once they're there, however, they're pretty likely to buy some food, based on the advertising and how the theaters are designed - which is pure profit (the material cost for a large popcorn is about 2 cents). It has incredible margins, and lasts forever (none of the stuff they serve goes bad). It's similar to how TV works - their core business is selling advertising, and if the cost of business to do that is creating shows that people like, so be it. Put another way, the point of TV shows is to get you in front of your TV so that you'll watch some ads. Likewise, the point of movies is to get you in the building so you'll buy some food.

JimmyL 17y ago

re: Popcorn - I haven't read the book, but I have helped run a movie theater. The answer, if you're not going to read it, it that popcorn (and the associated food products) is how the theaters make their money. Sure, your ticket price contributes, but it's mostly to cover their constant labor and facilities costs. If a movie theater schedules a showing, it has to run - doesn't matter if there's 2 or 200 people in the theater at the time. The labor to run the show is scheduled far in advance, and represents a sunk cost to the theater. That cost is seen by theater management as the cost of getting people into the building. Once they're there, however, they're pretty likely to buy some food, based on the advertising and how the theaters are designed - which is pure profit (the material cost for a large popcorn is about 2 cents). It has incredible margins, and lasts forever (none of the stuff they serve goes bad). It's similar to how TV works - their core business is selling advertising, and if the cost of business to do that is creating shows that people like, so be it. Put another way, the point of TV shows is to get you in front of your TV so that you'll watch some ads. Likewise, the point of movies is to get you in the building so you'll buy some food.