Chapter 53 Question ○46

Why is it so much cheaper to buy concert packages? (Michael Lee) Like most other elite symphony orchestras, the Chicago Symphony sells single performances as well as a variety of different packages.A package ticket means that the buyer wants to buy a series of performance tickets at one time.The price of this ticket is 35% lower than that of a single ticket.Why are packages so cheap? This form of pricing helps orchestras spread the fixed cost of each performance over a larger audience.Suppose the Chicago Symphony Orchestra schedules two performances in a series.The music of Berlioz (French composer, the main representative of French romantic school) and Tchaikovsky was performed in the first performance, and the music of Bartók (the leader of Hungarian modern music in the 20th century.) and The music of Stravinsky (Russian-American composer and conductor, an important figure in Western modernist music).

Let us also assume that the potential audiences for these two performances consist of four groups of equal size.The first type of people are fans of romantic music. They are willing to spend forty dollars each for tickets to the first show, but they are only willing to spend $20 for tickets to the second show; Like neoclassical music, they are willing to pay twenty dollars for a ticket for the first performance, and forty dollars for a ticket for the second performance; They were willing to pay forty-five dollars for a concert, and five dollars for a second;They were willing to pay forty-five dollars for the second show, but only five dollars for the first.

Considering how much potential audiences attach to the above two performances, when pricing, it is best to pay forty dollars for a single performance.At this price, romantic music lovers and Tchaikovsky fans may only attend the first concert, neoclassical lovers and Stravinsky fans at the second concert.If the number of each kind of audience is 100, then the audience of each concert is 200, and the total ticket sales are 16,000 US dollars. Now, the theater intends to offer package tickets for the two concerts.At this time, tickets for a single show cost $45 ($5 more than before), and a package ticket for two shows cost $60, so a single ticket cost $30 ($10 less than before).In this way, Tchaikovsky fans will still only listen to the first scene, and Stravinsky fans will still only listen to the second scene, just like before.

But with a package ticket, lovers of romantic music and neoclassical music may be willing to listen to both performances.So, although romantic music lovers paid ten dollars less to attend the first concert, they made a net profit of twenty dollars to the theater because they attended the second concert.Likewise, neoclassical lovers paid ten dollars less to attend the second concert, but their attendance at the first concert brought a net profit of another twenty dollars to the hospital. In order to cover the cost of performances, most symphony orchestras strive to achieve sufficient ticket sales each year.Offering package tickets helps them with that.Still assuming an audience of one hundred in each category, the theater manager's total ticket sales are now $21,000, $5,000 more than the previous algorithm.This is the inherent logic of offering package price combinations.