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I am currently in the process of trying to open a twin cinema and am having a difficult time trying to figure out what ticket prices I want to charge. I want to be cheaper than the other theaters which are within a short drive of mine, but not so cheap that I lose too much potential revenue. I do firmly believe that more butts in the seats is the most important thing as that will lead to higher concession revenues (hopefully), but if those seats would still be full at a little higher price anyway, then I would just be giving up a lot of additional income for no reason.


Let me give some details of the theater, as I know that they will affect the ticket prices...

a) The theater is located in a very large metropolitan area (2M+ population).

b) The theater will cater to a large niche demographic (900k+ populace), in which no other theater in the area is catering to.

c) It is an older cinema, but is being renovated ("face lift" being done to front of building and in lobby, restrooms have been re-done, both auditoriums are being converted to 6" riser stadium seating, etc.).

d) It is located in a lower income area of the city, but has the ability to attract customers from all areas of the county, regardless of income level.


The four closest theaters' ticket prices are...

Theater 1:
AM (Before Noon) - $6.00
Matinee Adult/Senior - $8.50
Child - $7.50
Senior (after 6pm) - $9.50
Adult (after 6pm) - $10.50
3D up-charge - $3.50

Theater 2:
AM (Before Noon) - $6.00
Matinee Adult/Senior - $9.00
Child - $8.00
Senior (after 6pm) - $10.00
Adult (after 6pm) - $11.00
3D up-charge - $4.00

Theater 3:
Matinee Adult - $8.00
Senior - $7.50
Child - $7.00
Mid-Day (4pm-6pm) - $6.00
Adult (after 6pm) - $10.00
3D up-charge - $3.50

Theater 4:
AM (Before Noon) - $5.00
Matinee Adult - $8.00
Senior - $8.00
Child - $7.00
Student - $8.25
Adult (Sun-Thurs, after 6pm) - $9.50
Adult (Fri-Sat, after 6pm) - $9.75
3D up-charge - $3.00

All four theaters are newer construction with stadium seating and the other standard amenities.


Here are the prices I was thinking of so far…

Option One:
Matinee (before 6pm), Senior, Child, Student, Hero (military, police, fire) - $5.00
Adult Evening - $7.50
3D up-charge - $1.50-$2.00 (not sure yet)

Option Two:
Matinee, Senior, Child, Student, Hero - $6.00
Adult Evening - $8.00
3D up-charge - $1.00-$2.00 (not sure yet)

Option Three:
Matinee, Senior, Child, Student, Hero - $6.50
Adult Evening - $8.50
3D up-charge - $1.50

Option Four:
Matinee, Senior, Child, Student, Hero - $7.00
Adult Evening - $9.00
3D up-charge - $1.00


The reason I am having a difficult time in deciding is because even though I will be catering to a niche demographic that the other theaters are currently neglecting, I am still wanting to draw some customers away from those theaters too, since those patrons will be saving money by coming to my cinema. However, I am not sure at what level of “less expensive” I need to be at in order for that to happen and still not forfeit additional revenue that I need in order to secure and re-invest into my business long term... Not to mention what price points will help me with the studios, while still giving value to my patrons. Please let me know what you think. Thank you.

In lowering you prices you might want to consider charging one price for all ages for all shows. My suggestion would be $5. I'm not sure about an up charge for 3D. That's the one thing that has kept some people from attending 3D shows. You want to be sure your concessions prices are lower than your competitions and that you offer more than does the competition. For your programming you might want to consider, in addition to current Hollywood releases, other films that might play to the demographics in your area and promote your lower prices and programming. If you don't have digital to start you will want to get that done within the next year or two. To take advantage of VPFs you'll need to do that sooner. Try to make your house a different and fun place to go. Service and good presentation are the key.

About Entertainment wrote:
What niche?

Hispanic

I would consider that Hispanic people who are looking for Spanish language entertainment may not be the ones with the most disposable income among their demographic group. I would suspect that Hispanic people who speak English well enough to enjoy a movie in English are the ones who are likely to have more money to spend at the movies. Those with more money and English proficiency may be more likely to go to the competition nearer their homes in other parts of the county. That means that those Hispanics who don't speak English well and who likely have less money are the core of your target market. At least these are the ones most likely to travel further to get to your theater, unless the cost of gas or the difficulty of the drive keeps them away.

This means that you might want to price tickets as low as you can. Even though there may be no one else catering to the Spanish language niche, you still have to compete with the potential customers' other options. They may decide to stay home and watch TV. They may decide to go out for live music and dancing. Etc. They have other options. They will consider if the value you are offering is worth the cost of admission just like any other group. They are not a captive audience.

My wife and I don't go to the movies at prime times because of the expense. At $10 a ticket, we steer clear, and instead take our kids to a $5 Saturday morning show. $20 is a lot better than $40. I wonder how many of your potential customers will think the same as us.

You say that you want to attract customers from other area cinemas with lower prices. If you are offering movies with Spanish audio or with Spanish subtitles, I'm not sure how many non-Hispanic people will want to attend. Even if English speakers also have audio or subtitles in their own language, they may find the Spanish alternative distracting. I would think the discount would have to be significant to draw them away from a major multiplex. It would be difficult to draw many, I would think. You can't be all things to all people. Focus on your target market. Set the prices for them. You can try to draw others, but remember your focus.

The most important question first is how far away are you from the other cinemas--- That will decide what your pricing is. If you are over 10 miles price wont matter. If you are 5-6 miles--you better be close in price in-order to get first run.

Beyond Slap's comment, which seems pretty reasonable, I think the only thing you can do is see what works in your market. Location, demographics and competition all make this a very localized decision that, I think, no forum can advise.

I once had an indoor house in a crappy location. Other spaces in the center were leased with no thought as to whether they made a complimentary business mix... it was purely a matter of who had the money to pay for the floorspace. As a result, we all could have just as easily been in the middle of an island by ourselves... might have been better off if we had been.

In this case, price made no difference whatever. I opened, thinking a discounted price would help. It didn't. I raised my prices to a competitive level, worried it might lower my attendance numbers. It didn't. I still didn't make enough to keep the place, but in my case, pricing alone had much less effect than I was thinking it would.

Now, someone else has the place. They're just 25 cents lower than a 10-plex that opened last week, just a half-mile down the road. THAT, I think, would be something to worry about.

If no one else is showing what you are showing and it has a strong chance of being sought after due to lack of availability any where else: set your prices right next to the others and do not discount. Other than matinees, etc. discounting.

Thank you for all of the responses. After speaking with some Hispanic newspaper and radio station companies here, I have found out that it is actually a myth that the Hispanic population is one which does not have much disposable income. In fact, according to their research, that demographic actually has, on average, the largest amount of disposable income when compared to other demographics. The Hispanic demographic, on average, spends more money than any other demographic in the US... Especially on family outings/entertainment. I also discovered that a majority of those who are bilingual still prefer to go to places which cater to the Hispanic community, not to mention that a good amount of those who are bilingual still have family members who are still Spanish-dominant, therefore going on family entertainment outings would still require attending businesses which can also cater to their Spanish-dominant family members.

As for attracting customers away from the other competing theaters, I do agree that I don't need to worry about that right now, and just focus on the niche I will be catering to. However, as for bilingual Hispanics who can go to either my theater or the competition, I do still want to get those customers away from the big boys and through my doors. For that, I know that I will need to have ticket prices less than the competition. I am still trying to figure out just how less though...

After reading Mike's and Slap's comments, I am now looking at two price points which are closer to the competitions:

a) Matinee/Child/Sr./Student/Military/Police/Fire - $7.00 & Adult Eve.- $8.00
or
b) Matinee/Child/Sr./Student/Military/Police/Fire - $7.00 & Adult Eve. - $9.00

With option A, I would match or be around $1.00-$0.50 less than the competition's Matinee/Child tickets and $1.50 less than the lowest price competitors Adult Evening price. This would be the price point to attract bilingual customers to my theater based solely on price.

However, if the research is correct and they would most likely prefer the Hispanic nature of my theater anyway, along with what Slap said about making sure I can get product from the Studios, I would then move more towards option B. This would put me as close as possible to the competition's prices without being even with them or going above. It would put me at only $0.50 less than the lowest price competitor in the market, but still $2.00 below the highest price one.

Please let me know what you think. Thank you.

P.S. - Slap, if you read this, would the $7-$9 price point guarantee me product despite the fact that I have other theaters within 10 miles from mine? I would assume so considering the sheer size of the market area and the fact that I would be going after a different clientele, but I would like your opinion as well.

About Entertainment wrote: ed?

I thought this niche was not being filled, meaning there are no hispanic audio or hispanic movies being play

There aren't, but with four other first run theaters within 10 miles of mine, you can't blame me for wanting to be 100% sure. I have heard about the big chains keeping product from independant theaters before. I have been told already once that I will not have any issue since I will be running the product with spanish subtitles or dubbed, but they will still be the same movies and a second opinion is always a good idea.