True Costs of going to the Cinema

This is based on an extract from 101 Things I Learned in Business School

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Before you start making sales it’s important to decide on the ticket price.

Whether you are selling a product or service it’s important to make your customers happy.

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The simple formula is:
Material Value + Profit = Selling Price
Material Value + Emotional Reward = Purchase Price

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If the customer values the emotional reward more than the selling price, you’ve given enough value.

In business transactions, the value is based on the economics, emotions or both. The deal works because each party assigns a higher value to what they receive than what they provide.

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What does that mean for films?

Cinema tickets can range from 5 Euros to 17 Euros depending on the film and depending on the venue. Is that really the cost of seeing a film?

If we look at the emotional value of a customer we cannot forget the Total Cost Exchange.

Going to the cinema to see a movie often means buying
• Ticket (10 Euros)
• Drink and Food (10 Euros)
• Travel Expenses (10 Euros)
• Miscellaneous Costs (5 Euros)

The average cost of going out to the cinema (based on The Netherlands) is about 35 Euros.

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That’s the real exchange filmmakers and distributors have to consider.

The virtual purchase price is 35 Euros.
The material value + emotional value should exceed this total cost.

If so, the 10 Euros selling price is justified.

1. 101 Things I Learned in Business School — Amazon