Are Disney prices too high?

[Bullseye]

I agree that $3.00 for a bottle of water is more than I pay locally but that's because the store I bought it at is next to a castle or Japan or a haunted hotel or dinosaurs etc...which makes it special water.

 

[fitzperry]

And without your, "bean counters/pencil pushers and spreadsheet analysts" who keeps the money from pouring right down the drain? I guarantee you they were hired for a reason. And without them, Disney would quickly crumble due to financial mismanagement, the company would be broken up and sold piecemeal, and it would be the end of an era.

Well that was the balance Roy brought to Walt, right? A solid business needs both. But striking the proper balance is an ongoing challenge, and in a creatively focused company there will always be tension between those functional areas.

 

[bryanb]

I'm not really sure what your point is. My post was in response to the adage that "this is what the market will bear". And the point was, it is never clear if that applies to revenue maximization or customer maximization. I can't tell from your post where you are coming out on that. Spreadsheets. Studies. What does it all mean from the customer's standpoint? If a company can squeeze more revenue out of 100 willing customers than it could out of 300 customers, is that what "the market can bear"? And if so, where does that leave the 200 people who are out of the game? Looked at another way, how does one view a scenario where 5000 people are willing to pay $5 for an item. And then all 5000 are willing to pay $6 for that item. And then the price goes up to $7 and a third of the people are no longer willing to pay that price. At what point does one establish "what the market can bear"? The price at which you still have a single customer still in the game? The point where you have half of your customers still in the game? None of this is addressed in your post. If you are the company running your spreadsheets and studies, maybe all you care about is net profit for the quarter or year. But that is very dangerous. If you price 75% of your customers out of the game but make more money from the remaining 25%, then good on you. But when those 25% die, or age out of your constituency, or move on to other things, you are stuck. Sometimes "what the market can bear" means keeping most of your original 5000 customers and not milking 25% of those customers for all they're worth.

I didn't address your scenarios because I don't know the actual numbers. I'd be making them up. But I guess it's true: I'm sure that millions of people DON'T go to Disney World every year because they are priced out of the market. Whether that's 75% of the potential market, more, or less, I have no idea. And that "remaining 25%" (or whatever the number is) isn't stagnating, dying off or aging out. The scenario isn't meaningful given the strong ticket sales, lines for food and the fact that people haven't stopped booking ADRs. Or buying merchandise. Or booking on-site rooms. The parks are doing really well, so any doomsday scenario about catering to a small percentage of the market is a long ways off.

Theoretically, you are right... Disney could go too far and that "remaining 25%" stops going. But I don't think we have to take it to the extremes you cite in your examples. Forget about 1/3 of consumers or all but a single consumer. If they see attendance or per-guest spending slip by even 1%, they will know it in their reports and they can tinker with it to maintain growth. That's the benefit of being a huge corporation with hundreds of people sitting in cubicles and offices. When there's a hiccup, they'll run a discount offer. They'll do off-season pricing at buffets. Or run more Florida resident specials. They'll lower the price of that t-shirt. There are so many levers to pull.

As a consumer, I want prices to come down (as long as the crowds don't go up). But all of these business cases for lowering prices are just theoretical.

 

[Bullseye]

And without your, "bean counters/pencil pushers and spreadsheet analysts" who keeps the money from pouring right down the drain? I guarantee you they were hired for a reason. And without them, Disney would quickly crumble due to financial mismanagement, the company would be broken up and sold piecemeal, and it would be the end of an era.

Bless you Magpie, over the years I can't tell you how many threads I have seen where every time there's trouble in paradise, people blame the demise of WDW on the bean counters and it makes me cringe.

 

[MischaOz]

I didn't read every single reply so sorry if I'm repeating here, but the negative posts are really starting to get me down! Everyone is entitled to his/her own opinion, but I'm not sure how a complaint about prices (not a discussion about how to save $, etc) equates to a theme park attractions strategy. I joined this forum because of my love for Disney and to help plan with future trips, but man, it's becoming depressing on here!

 

[Tarheel girl 1975]

We will just have to agree to disagree. Yes wages are stagnant in most sectors but Disney has and IMO will always bring people to their gates in droves. Just look at Disneyland as a case study. 60 years of data involving attendance and pricing wether the economy was good bad or in between.

If that's true, then why didn't MK eclipse its attendance numbers for 1991 until 2013? And why are there still less people going to Epcot than there were in 1991?

 

[Magpie]

Bless you Magpie, over the years I can't tell you how many threads I have seen where every time there's a trouble in paradise, people blame the demise of WDW on the bean counters and it makes me cringe.

I'm married to a civil servant. I'm glad to know there are people who understand and appreciate the value of the bean counters!

 

[Networth]

I beg to differ. We've gotten plenty of discount deals over the years. When the number of guests drops too low, Disney lowers their prices with discounts and extras.

They also lower costs by cutting park hours and cutting staff hours. One MK parade each night instead of two. Open or not open places like Tortuga Tavern, or add a lunch shift at a place that normally closes.


Most attractions also cut back the number of cars/boats/trains they run.

Applying a discount does not equal cutting prices. I am a FL resident I don’t pay regular rates does that mean that tickets or rooms have gotten cheaper over the years? It is the same thing that happens with room “discounts” or “free dining”. No one, myself included is really getting a “discount" we are paying what Disney was happy to charge in the first place for that set of rooms/tickets/food. They throw a discount on something when hey want to move product, they are not loosing money on that product. They are just not making as much profit as they may have.

Same with cost cutting on their end. It does not make it cheaper for the guests to cut hours or staff, just cheaper for Disney thereby still guaranteeing themselves a profit.

 

[flicx]

If that's true, then why didn't MK eclipse its attendance numbers for 1991 until 2013? And why are there still less people going to Epcot than there were in 1991?

Perhaps the lack of attractions at epcot is finally starting to wear on the Disney faithful. I see a similar pattern happening for the studios too. This has to be especially disturbing when you are hitting high attendance numbers for the magic kingdom. People apparently are already putting a cap on some spending if they won't visit another park (EPCOT)while at Disney because they obviously aren't seeing the value in going to it like the magic kingdom!

 

[Networth]

If that's true, then why didn't MK eclipse its attendance numbers for 1991 until 2013? And why are there still less people going to Epcot than there were in 1991?

Valid argument, I would say on the MK attendance numbers Disney had far fewer international tourists during most of the 90’s/2000’s. Particularly South American and certain segments of Asia and Europe. Around 2010 international tourist particularly from the UK and Brazil picked up, I believe it accounts for about 20-25% of all WDW attendance numbers. Epcot has loss much of its luster it has never been the big draw like MK or DL to their respective resorts. When they see attendance drop they usually get into action (i.e. DHS with Frozen and now the entire revamp). Point being if your look over the long run Disney consistently has found a way to fill their parks. People complain about prices, than they book their next trip.

 

[10-4 Good Buddy]

I'm married to a civil servant. I'm glad to know there are people who understand and appreciate the value of the bean counters!

Bean, beans, they're good for your heart.......

 

[Davey Jones II]

And without your, "bean counters/pencil pushers and spreadsheet analysts" who keeps the money from pouring right down the drain? I guarantee you they were hired for a reason. And without them, Disney would quickly crumble due to financial mismanagement, the company would be broken up and sold piecemeal, and it would be the end of an era.

With those soulless number crunchers leading them to do it, they poured $2 billion down the drain with their unneeded MyMagic+ initiative. Not to mention the untold millions wasted every year for their salaries.

If you have a great product that everyone wants, you don't need any of the cynical manipulation that the bean counters love. Just open your doors and let the customers eagerly give you their money.

Walt started from scratch and accomplished miracles, with little more than guts and a dream. The managers of his legacy today have vast resources, yet they seem to think the public has to be manipulated into parting with their money. That's why they keep hiring these soulless MBA types, instead of creative visionaries who can build great IPs.

 

[Davey Jones II]

If this thread didn't exist, and it wasn't 15 pages long (and counting), I would be worried as a shareholder that Disney was leaving money on the table. The fact that they've hit a point where the parks are bursting with patrons and the prices are high are very good for the company. I'm not a financial adviser, so I am not advising anyone to buy Disney stock, but a few shares are within reach for anyone who can afford to vacation there.

People have been making the same complaint about Disney since forever, and worried that it would price itself out of the market and that attendance would decline. Attendance has kept going up over time. And the stock price has reflected Disney's success.

This is a fan forum. We don't care about share prices.

Perhaps the lack of attractions at epcot is finally starting to wear on the Disney faithful. I see a similar pattern happening for the studios too. This has to be especially disturbing when you are hitting high attendance numbers for the magic kingdom. People apparently are already putting a cap on some spending if they won't visit another park (EPCOT)while at Disney because they obviously aren't seeing the value in going to it like the magic kingdom!

On our last trip, we spent eight days at WDW but only a half day at Epcot. We did intend to do more than that, but just didn't get around to it. It just wasn't a strong enough priority to allocate the time for it. Epcot needs a revamp.

 

[amylevan]

Walt started from scratch and accomplished miracles, with little more than guts and a dream. The managers of his legacy today have vast resources, yet they seem to think the public has to be manipulated into parting with their money. That's why they keep hiring these soulless MBA types, instead of creative visionaries who can build great IPs.

Um, Walt was indeed a great visionary but he didn't have a lick of business sense. Without help, he would have run the company straight into bankruptcy.

 

[Davey Jones II]

Um, Walt was indeed a great visionary but he didn't have a lick of business sense. Without help, he would have run the company straight into bankruptcy.

I read a biography of Walt Disney, and your characterization is false. Every time he wanted to take a risk that he believed in, many were opposed to him and they turned out to be wrong. He risked everything to create the first animated feature (Snow White), and everyone called it "Walt's folly." It was the biggest box office hit in history up to that point, and financed an entirely new studio.

He risked everything once again to create Disneyland, even selling one of his homes. Roy and many others thought he was crazy. It was a huge success. Then he poured every penny of the profits back into the park, upsetting ABC, a key investor in Disneyland. Thankfully, he didn't listen to them, either.

Sure he needed help, no one can build a great company alone. But many times, when people expected him to "run the company straight into bankruptcy", he listened to his dreams instead of listening to them. And he won.

 

[Puffy2]

Yes, their prices are too high. Sometimes they are crazy high. They wanted $10 for a pint of strawberries TEN DOLLARS for something that is $2.50 in the grocery store. and $40 for a buffet.

But they will continue to go up on prices as long as people pay, that is just the nature of business. For me, however, I won't be going back for a few years.

 

[bcrook]

So much this. If the parks were not crowded I would say prices are too high, but they are more crowded than ever. Record attendance dictates the prices are not high enough. The thing that really bothers me are cutbacks in the little areas like maintenance and food quality.

And the money grab with the inane cc guarantee for all restaurants.

 

[bcrook]

Disney is worth the price. Frankly they are right at most other entertainment venues. Have you been to a pro game latterly??.........take Baseball........3 hours (not near a whole day),,,,,,family of 4 about $400.00.......concert anywhere from about $65 in the pigeon seats to thousands!.....again a 3 or 4 hours event.

AKK

But at a concert or ballgame you don't sustain it for 5, 7, 10 days? Only at Disney. That is what makes it so expensive. The disproportionate cost increase in the mediocre buffets alone is alarming.

I was ticked at the Tables in Wonderland increase from $75.00 to $100.00 too.

There used to be more bargains, but most of those are gone. It is more and more difficult to rationalize a trip.

I travel about 6 weeks a year all over the place, my Disney trips are always the most expensive.

 

[bcrook]

Disney is not gouging any more then Uni is . They are charging what the market will bear and in comparison to other entertainment venues, like sports and concerts, Broadway shows etc.

AKK

They are definitely in a stage or business plan to push the pricing as far as they can to extract the most money they can. That is a relatively new decision (also combine that with a net loss in attractions and cut back on staffing) and you have a business model that is less customer friendly.

Just because Disney can push the limits as far as the market will bear, doesn't mean it has to. It will eventually lead to a backlash.

I wonder if they are getting away with it because of a robust Foreign market. Although attendance is high, growth rate hasn't been high. Are more domestic customers cutting their trips, and being replaced with more world wide customers?

 

[bcrook]

But that oversimplifies things because you have not defined what the market is. If Disney used to sell Turkey Legs to 5,000 people at $6 a pop, and now sells them to 3,158 people at $9.50 a pop, it receives the same revenue. But can it be said that this is "what the market will bear"? It priced 1,842 people out of the market. Looking at this in the extreme, suppose it decided to sell only one Turkey Leg per day, and this created a mad fervor to be the one person to buy that leg, and Disney raised the price to $30,000 for that one leg, and each day, it sold that one leg. It would be generating the same revenue as when it sold 5,000 at $6 each. But is this "what the market can bear" if virtually every prior customer stopped buying the product? Sometimes "what the market can bear" means generating a similar or greater revenue stream than before. But sometimes "what the market can bear" means the price at which all of the current customers remain current customers. Frankly, I don't think $9.50 is what the market can bear for Turkey Legs. I am sure that they are selling far fewer of them than ever before. I know that my family is off that bandwagon, or cart, as the case may be.

Yes! This is a nasty trend. It is starting to rob me of one of my favorite vacation places.