The optimal prices for theme park admission in Table 5.4 are based on the assumption that admission fees are the only source of revenue for the park. However, the owner determines that visitors to the theme park spend an average of $12 per per- son on concessions, generating an average concession margin of $5 per person.

a. Single admission price with concessions

b. Individual daily prices under variable pricing policy with concession revenue

c. Impact on optimal prices from including concessions in optimization. Which prices are lower and why?

d. Impact on total weekly margin from including concessions in optimization vs not including.

Note, in the base case the company still gains concession revenue even if it is not included in the

optimization

 

Day of week Sunday Monday Tuesday Wednesday Thursday TABLE 5.4 Theme park daily prices, attendances, and revenues under constant pricing and under variable pricing Friday Saturday TOTAL Price $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 SINGLE PRICE Attendance 1,000 250 400 461 684 1,000 1,000 4,796 Revenue $25,000 $6,250 $10,000 $11,535 $17,105 $25,000 $25,000 $119,890 Price $33.87 $15.00 $17.50 $18.01 $19.00 $27.00 $38.33 VARIABLE PRICING Attendance Revenue 1,000 $33,870 750 $11,250 700 755 1,000 1,000 1,000 6,205 $12,250 $13,590 $19,000 $27,000 $38,333 $155,294