Movieconomics

Lights , Camera and Action!! Have you ever wondered why a weekend show costs more than a weekday one? Why the cost of the same seat ,the same movie and the same screen becomes Rs 350 instead of Rs 200 just because it’s a weekend In this blog we will try to address this question through the concept of price discrimination. So grab your popcorn and let the adventure begin. Price Discrimination In simple words , price discrimination occurs when businesses charge different prices for the same product or service based on -

• who is purchasing the item (e.g. - Spotify offers its subscription at a lower cost to students)

• when they are purchasing it (e.g. - Movie tickets are costlier on weekends)

• how they are purchasing it (Hotel rooms often cost less in case of advance booking ).

The core idea is to maximize profit by tapping into the customer's willingness and ability to pay.

There are 3 types of price discrimination -

• First Degree - Charging customers the maximum that they are willing to pay.

• Second Degree - Prices change on basis of the quantity or version of the product

  (e.g.- the cost of a small , medium and large popcorn differs)

• Third Degree - Prices change for different customer segments.

  (e.g. - Weekday Vs Weekend moviegoers)

Demand

The basic law of demand and supply states: When demand increases and supply remains the same , prices go up.

On a weekend people are free. This increases the demand , but the number of seats (supply) remains the same . Moreover the customers are willing to pay more. Hence the prices go up , and no customers are lost due to the price hike.

Willingness

However some people may choose to save money and thus watch movie only on weekdays when the prices are lower. Weekday - Attracts budget conscious customers

Weekend - Attracts customers who are willing to spend more money

This distinction is the foundation of price discrimination.

Elasticity of Demand

This means how sensitive the customers are to price changes. Weekday - Price sensitive, If prices rise they will skip the movie.

Weekend - Less sensitive , Will go even if the prices rise.

Fairness Now the question arises is this fair?

However in economics we aren't concerned with fairness. Efficiency and profitability are the main goals.

Many people may think that theaters take advantage of their time constraints . However there is also a positive side to this. Many theatres give discounts to students. The concept of price discrimination also helps theaters to fill their seats during low demand by reducing prices .

Psychology

Last but not the least , the concept of price discrimination also includes the role of human psychology.

• A movie ticket of Rs 199 feels cheaper than Rs 200.

• A Rs 250 seat feels cheaper if another seat costs Rs 400, even if it is not.

• Showing that only 3 seats are left , make you act faster.
  

So next time you book that Saturday night movie, know that you’re not just buying a seat—you’re buying into economic strategy at work!