if things were 1/2 the price, would they sell 3x as much?

[scottbee]

Have you ever wondered about the pricing of 'on board' items? Take for example photos; If they were 1/2 the price, would they sell 3x as many? I personally think they would.

 

How about drinks? Wine for dinner? Given they're paying next to nothing for the booze (Duty free in intl waters), they're asking you to pay $30 for a $5 bottle of wine. In fact on some of these items, is the cost (in labour) to collect the money exceed the cost of the items (say non-alcoholic drinks)

 

Opinions?

[Kitties26]

I totally agree.

We just got off the Millennium and I can't believe the prices they were charging for photos. US$20 for a single picture.

 

They must have taken at least 20 photos of us during the course of the cruise, and they printed every single one for display in the gallery. We did buy one, but had the photos been half or a third the price, then we would have bought a lot more, meaning they would have doubled or tripled their profits from us. And they woudn't have wasted all their resourses and labour costs in printing photos just to be thrown away.

 

Same goes for the drinks. Don't get me started on the over priced rip-offs called shore excursions (on our Aust/New Zealand cruise anyway).

[Lsimon]

Photos are a good example. We no longer buy photos as they are too expensive. Yes it's true that after a few cruises we have most of the ship's photos we'd like, but there are often a few we'd buy if the prices were more reasonable.

 

Drinking - well I don't think we'd drink much more than we do now (is that even possible?). While the prices of drinks are definitely not cheap they are comparable to, or less than, most of the nicer restaurants around here and in resort areas. So they are not out of line as far as that is concerned. I think the cost, to the cruise line, of the alcohol isn't particularly relevant. What is more relevant is the price of comparable items in a land based resort area.

[smelkin]

Have you ever wondered about the pricing of 'on board' items? Take for example photos; If they were 1/2 the price, would they sell 3x as many? I personally think they would.

 

How about drinks? Wine for dinner? Given they're paying next to nothing for the booze (Duty free in intl waters), they're asking you to pay $30 for a $5 bottle of wine. In fact on some of these items, is the cost (in labour) to collect the money exceed the cost of the items (say non-alcoholic drinks)

 

Opinions?

 

The phrase I was taught was "penny wise, dollar stupid!!!"

[TWELVEOHONE]

Have you ever wondered about the pricing of 'on board' items? Take for example photos; If they were 1/2 the price, would they sell 3x as many? I personally think they would. Opinions?

 

In my opinion the anwer is YES maybe 4x. But the question is not will they sell more but will they make more profit. Once again I would venture to say yes

 

I think the drinks are way too expensive not only do they get the booze duty free but the local bar who pays tax on the booze charges less. BTW the local bar pays the bar tender and other employees more than the cruise lines.

[Napi's Mom]

I guess Walmart answered this question for us a long time ago, and people are still stupidly insisting that if it's less expensive it HAS to be inferior. Even when they were the same brands of anything, people were convinced that they were "2nds"...rejects, because other stores with "Good names" charged 2-3x more. If a company puts it's name on...it's not a reject.

 

On our first cruise were bought 3-4 photos, on the suceeding ones...less & less over the years. Thankfully Oceania didn't take ANY and we loved that!! Azamara did but only after asking if we wanted any, Stupidly we bought one, but not for $20. We thought also that tossing the unsold away is an example bad marketing. They were printed so why waste them.

[caribbeanboy]

Last week I saw on the pool bar on the Splendor that the drink of the day costs ONLY!! $7.50 (plus 15%) Ok you might get a pink or yellow Carnival souvenir glass made in China that most probably doesn't cost Carnival more than a quarter.

[paulred]

Most people who choose a Celebrity cruise can afford a $6 drink or a $25 bottle of wine. X counts on that.

 

However, there is another dynamic at work here. More and more, people are becoming value shoppers. That doesn't mean they always want the cheapest price, but they don't want to feel ripped off.

 

Given that those of us who drink know the cost of things, we can easly see when the cost far exceeds the value, so we don't buy.

 

At $6 per drink, I may have one now and again, and therefore tip the 15% now and again. At $4., I am on it every day, more than once. I'll end up spending a lot more, complete with those 15% tips, and they will profit a lot more.

 

But, it's their ship. their investment. We're just the fickle customers.

 

Paul

[TravelerThom]

Those of you who think that RCL [owner of RCI, Celebrity, Azamara, Pullmantur, etc] has a substantial profit margin from onboard sales are right. One category of their balance sheet is "Onboard and other" defined as sale of goods and/or services onboard our ships not included in passenger ticket prices, cancellation fees, sales of vacation protection insurance, pre- and post-cruise tours and air packages. RCL's 2007 Annual Report lists US$1,722million revenue from "Onboard and other" and $406million "Onboard and other" expenses, which by my quick calculations show as a profit margin of 324%, and a net profit of $1,316million. Note that RCL's total profit was $603million, so they are operating at a substantial loss except for being kept afloat:rolleyes: by "Onboard and other".

 

IF RCL lowered their onboard prices, no doubt their profit margin percentage would decline, but I (like the rest of you) would think that their total profit would increase. One would think that RCL MUST consider this as we are discussing MAJOR amount of money, but they do not seem to be arriving at the same conclusion that we see.:confused:

[BEAV]

While everyone (myself included) would like to see lower prices for photos, cocktails, etc, keep in mind the average cruise fare has dropped from a few years ago.

 

Case-in-point: In January 2001 we were anxious to sail aboard Millennium when she was brand new. We paid $1000 per person for an inside cabin for 7 nights. Now, in January 2009, we are looking to sail Solstice, and are currently seeing inside cabins at $800. For two people, that's a savings of $400 2009 vs 2001. You have to look at the total picture.

[greydog]

Have you ever wondered about the pricing of 'on board' items? Take for example photos; If they were 1/2 the price, would they sell 3x as many? Opinions?

 

This question refers to economists' 'price elasticity of demand' concept. A 200% rise in demand from a 50% price reduction implies a '4' price elasticity, which is very high compared to most consumer items. If it was in fact so high, any CL would stand to increase their total profits and they would have found this out already - except for commensurate rise in rowdy behavior. :cool:

 

Sorry for taking such an academic spin on this - I'm this boring in person too! :eek:

[signman]

This question refers to economists' 'price elasticity of demand' concept. A 200% rise in demand from a 50% price reduction implies a '4' price elasticity, which is very high compared to most consumer items. If it was in fact so high, any CL would stand to increase their total profits and they would have found this out already - except for commensurate rise in rowdy behavior. :cool:

 

Sorry for taking such an academic spin on this - I'm this boring in person too! :eek:

 

But you are a cruiser, so you are A-OK in my book.

[cpj]

I no longer buy photos. Use to buy them. I now only have one drink in evening, Use to have 3 or 4. Use to get to get rubdowns in spa. No more price is to high.I no longer buy cokes drink water instead. Refuse to pay $2.50 for a can of coke. Believe me I can afford all of these things. Its got to a point where I feel there ripping me off. A smart businees would try to get more volume dollars but a lot of companies look at percentages instead of total dollars earned. You think they would look at Walmarts success. The cruise lines had better wake up and understand prople who have the means to spend and not stupid and will not spend when they feel there being taken advantage of. Just my thoughts.

[Dale]

Have you ever wondered about the pricing of 'on board' items? Take for example photos; If they were 1/2 the price, would they sell 3x as many? I personally think they would.

 

How about drinks? Wine for dinner? Given they're paying next to nothing for the booze (Duty free in intl waters), they're asking you to pay $30 for a $5 bottle of wine. In fact on some of these items, is the cost (in labour) to collect the money exceed the cost of the items (say non-alcoholic drinks)

 

Opinions?

 

If they were selling at 1/2 price, everything would still be over priced.

[scottbee]

This question refers to economists' 'price elasticity of demand' concept. A 200% rise in demand from a 50% price reduction implies a '4' price elasticity, which is very high compared to most consumer items. If it was in fact so high, any CL would stand to increase their total profits and they would have found this out already - except for commensurate rise in rowdy behavior. :cool:

 

Sorry for taking such an academic spin on this - I'm this boring in person too! :eek:

 

I didn't want to take it to such an academic level, but yes. However, there's also a base cost associated with 'make more product'.

 

Let's say the drinks cost $1 (labour + materials) to make, and we sell them for $5, $4 profit

if we lower the cost to $2.50, our profit drops to $1.50, so we'd need to sell 266% more of them to make the same profit. so it's not quite as easy as the twice as much at half the price is the same.

 

However, the photos are already printed, there's minimal additional cost in selling them. I really think that they've gone too far with the photo cost, and I wonder if they've experimented with a radical drop in price (say to $5 from $20).

 

I remember years ago that the Swedish(?) Rail system dropped their prices in 1/2 and ridership went up something silly like 6 fold, and afterwards they were asking themselves "Why didn't we do this years ago". I suspect the cruise industry might see this happen shortly, certainly for some onboard items like photos.

[Host Walt]

I didn't want to take it to such an academic level, but yes. However, there's also a base cost associated with 'make more product'.

 

Let's say the drinks cost $1 (labour + materials) to make, and we sell them for $5, $4 profit

if we lower the cost to $2.50, our profit drops to $1.50, so we'd need to sell 266% more of them to make the same profit. so it's not quite as easy as the twice as much at half the price is the same.

 

However, the photos are already printed, there's minimal additional cost in selling them. I really think that they've gone too far with the photo cost, and I wonder if they've experimented with a radical drop in price (say to $5 from $20).

 

I remember years ago that the Swedish(?) Rail system dropped their prices in 1/2 and ridership went up something silly like 6 fold, and afterwards they were asking themselves "Why didn't we do this years ago". I suspect the cruise industry might see this happen shortly, certainly for some onboard items like photos.

Not to extend this into a boring applied economic discussion, the concept of elasticity is theoretical, but economies and diseconomies of scale, along with the impact of the associated indirect overhead elements, need to be considered, as do the marketing notions of perceived (tho not necessarily rational) price = value.

 

The Swedish Railroad model is a sood demonstration of the price/demand aspect but if a 6 fold ridership increase resulted from a 50% price drop, it is very likely that the Swedish government (the RR's are nationalized in Sweden) would have to spend gobs of money in new capital equipment (at significant cost) to satisfy the increased demand.

 

'Nuff 'Dat. The point, with which I agree completely, is that the photos are just too expensive and that's not a good thing for either the customer or the photo concession.

[Tricia28]

This reminds me of when VHS movies (yes, I am old) first came out and they were priced so high ($80 to $100) that no one bought them. When Disney released Sleeping Beauty (the first VHS release as prior releases were laser disc or Beta cassette) it was priced at $29.95 and sold 1.2 million copies in 4 months. Disney made a HUGE profit margin by selling in quantity even though some would have paid $80.00 for Sleeping Beauty. The next release, (Lady and the Tramp) sold 3.2 million copies at this price and made Disney the leader in sales of VHS. I know it's a different industry, but to some degree the same principles apply. I especially understand the comments on the photo prices. $20 to $25 for an 8x10????!!! I probably seem grumpy, but I have asked ship's photographers not to snap pictures because I hate the thought of the wasted ink/paper on photos that are just too expensive to buy! While I balk at 2 photos for $40.00, I would be happy to buy 6 for $60.00 and spend the extra. As for drinks, I definately have cut back. I still enjoy the occassional drink, but frankly I would drink wine with every meal onboard if either the price of the wine was cheaper or the quality of the wine for the prices they are charging was higher.

[Peregrina651]

This question refers to economists' 'price elasticity of demand' concept. A 200% rise in demand from a 50% price reduction implies a '4' price elasticity, which is very high compared to most consumer items. If it was in fact so high, any CL would stand to increase their total profits and they would have found this out already - except for commensurate rise in rowdy behavior. :cool:

 

Sorry for taking such an academic spin on this - I'm this boring in person too! :eek:

 

I knew this was a test --and I flunked it the last time I took, too!

 

I just don't get how folks can get rowdy on cheap photos.

[signman]

I don't pose for any photos because I know I'm not going to be a buyer, but this thread got me thinking, and if I knew how to set up a poll I would do it.

 

But I'll bet they would sell the hell out of their printed anyway photos if priced as follows.

 

All regular shots.......$10 each, 3/$25

 

Custom poses..........$15 each, 2/$25

 

What does everyone think?

[BurgerBits]

Howard - I think that's a GREAT idea. Photos are the one thing on =X= ships that I consider really overpriced; they're higher than the ones on Crystal. Because of that, we pose for LOTS of them, hoping to get just a few worth purchasing. (I know, we're shooting our own feet here...!)

 

Being an avid digital photog, I understand that it costs lots of time and $ to produce the hundreds of thousands of pics they generate, but yep. I agree that they'd recoup their outlay and turn a higher profit if the shots were more reasonably priced.

 

Another thing: I would be willing to pay more to be able to see some of our shots in black & white, and would purchase more as well. Heck, I'd spend a LOT more if I could get the original on a CD!!

 

Anyone else's thoughts??

[jasm8449]

As the prices of the photos rise, and fewer are sold, I'm wondering what happens to the tens of thousands of photos that are not purchased. I guess when you multiply it by the entire fleet, that would be hundreds of thousands....

[cruiserbryce]

markups are the nature of things...ever thought about the $6-7 drink at the restaurant you go to...take Rum and Coke as an example...$6.50 for a little rum and a lot of coke...how many $6 drinks do you think they cant out of that $20 bottle of rum?

 

Sure they would sell more, but cruise ships arent the inventors of the markup...or outstandingly higher than other businesses...anyone bought wedding pictures recently...if the pics cost to much for you (as we think they do), then dont buy them...we've been on 8 cruises bought maybe 10 cruise line pics but have tons of our own that have turned out great

[TravelerThom]

markups are the nature of things..

Of course some of this thread is a complaint about high prices, but I interpreted the OP to be inquiring if RCL is truly maximizing their profits, or would they make more $$$ if the prices were adjusted to a more optimal point [resulting in a win for the company and a win for the passemgers]. Personally I don't complain about RCL pricing, but it does substantial reduce the items that I buy onboard. I took an American chartered Russian river boat in 1995, and had an interesting discussion with the person who had the onboard video concession. He had this priced at US$50, and I thought that [in 1995] that pricing above $35 significantly reduced sales. The consessionaire was a physicist [as am I] and I tried to explain that he had fixed up front costs for the videographer and for editing, but his marginal costs to produce one more video were probably only a couple of dollars, and that he would sell so many more at $35 that he would make a lot more money. I figured that he had grown up under communism, and the capitalist concept of maximizing profit was alien to him, but surely this is not an alien concept to the Americans who run RCL.

 

Thom

[woodofpine]

We ALL so freakin' smart and experienced in cruise ship product pricing that what we say actually means a thing... :(

 

So - how many of you have worked in the finance dept. of a cruiseline? Don't overwhelm me now!

 

A poster I'm not fond of that works for the lines points to the extremely high cost of hazardous waste disposal in foreign ports to off load photo development chemicals... ever think of that?

 

And of course a decent French, Italian, or California wine is just "free" in the absence of 'duty'... getting it to St. Thomas USVI or someplace further afield costs nothing right?

 

Give it a break folks... or put your resume in...

[kittyluvrnurse]

I do remember that the photos got progressively cheaper toward the end of the cruise. Is this not the case with =X= ?