10 Products With Big Markups
The Stanford Graduate School of Business and the University of California at Santa Cruz conducted research into the pricing of movie concessions. Popcorn, for example, often sells at a cost that reflects a 1,000-fold markup compared with the cost of the kernels.
Among their findings were that by charging high prices on concessions, theaters are able to keep ticket prices lower.
The findings seem to suggest an answer to the age-old question of "whether it's better to charge more for a primary product (in this case, the movie ticket) or a secondary product (the popcorn)," the researchers said. "Putting the premium on the 'frill' items opens up the possibility for price-sensitive people to see films."The researchers also point out that cinemas rely on concession sales to keep their businesses viable. Although concessions account for only about 20% of gross revenues, they represent some 40% of theaters' profits, they said. While ticket revenues must be shared with movie distributors, 100% of concessions go straight into an exhibitor's coffers. -- Written by Joe Mont in Boston.
>To contact the writer of this article, click here: Joe Mont. >To follow the writer on Twitter, go to http://twitter.com/josephmont. >To submit a news tip, send an email to: email@example.com.
Get more stock ideas and investing advice on our sister site, Stockpickr.com.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV