Parking Increase

[G66]

It's a money grab, without question, but I doubt most people will feel any more fleeced by $14 than $12. This is primarily because, outside the extremely tiny minority of Disney guests that use this board and others like it, and the even smaller minority that pay attention to these threads, most people won't even know there was a price increase. Like you said, most people don't price parking before they go to the parks (probably because it isn't a real determining factor in their vacation budget...not saying that it shouldn't be, just that it isn't for most people). People won't likely complain about parking that costs less than most athletic venues, show venues and airport day parking, because it doesn't rate a significant enough blip on their own radar screens.

Well, I hear a lot of people complain about the parking at athletic and concert venues. I also know for a fact that many season ticket holders are having a hard time even giving away tickets to some events because of all the costs associated with going, even if the tickets are free.

Time will tell. One thing is for certain, it's much harder to regain the business of a lost customer than it is to retain a customer.

 

[spaddy]

I have to say I am not happy about the amount that Disney charges for parking, but they give you a lot more ways to work around paying it than other places in Orlando. We are considering going to Universal in December and the $12 (I am sure to soon be $14 also) for parking makes me crazy. At least if you stay onsite at Disney you get out of paying the parking fee. You know what you get if you stay onsite at Universal? $10/day added to your resort stay. Paying for parking at any resort makes me absolutely crazy. I can understand if I am staying in a city that has limited parking, but most hotels now just see it as a way to get more money out of you. If Disney starts charging parking for onsite resorts guest then I think I will be at my personal tipping point.

 

[WaltD4Me]

When I posted that message I never intended or meant to imply any comparison between between Disney and Darden. I just wanted to pass along the fact that someone out their understood the importance of not cheapening a brand by lowering prices.



_______________
Armand

I understood your point, but I wonder if Darden is lowering their quality at all in addition to not lowering their prices? Are you getting the same food, same quality and same portion sizes? I don't know the answer in the case of Darden, but with Disney, it seems to me they are raising prices and giving less for more $$$. (As an example, comments I've heard and read about this year's Food & Wine Festival come to mind) So that's a really big difference to me as compared to Darden just not lowering their prices.

 

[jcb]

Does anyone else realize that park tickets have gone up 25% in the last 6 years?!?!?. Resort prices have gone up 20% during that same timeframe?!?!? Food prices; although I can't put an exact percentage on it has probably paced ticket and resort prices as well.

Very good point but I'm afraid it is worse than that. I save (on my computer) old receipts from online purchases.

In 2003, I bought 4 day park hopper tickets for $192 each (pre-tax). Buying in advance saved me $16 per ticket. That same ticket today costs $277 and there is no longer a discount for advance purchases. That is an increase of 44% (or 33% increase over the 2003 no advance purchase price).

I also saved old online menu prices from 2001. Assuming those are accurate, here is a comparison of buffet price increases from 2001 to now:

Chef Mickey's breakfast - 44% increase
Crystal Palace dinner - 45% increase
Akershus dinner - 57% increase

But:
Crystal Palace breakfast - 19% increase

I also compared the beef tenderloin dish from Chefs de France and found it increased 23% from 2001.

By means of comparison, inflation increased by 22% from 2001 to 2009 and 17% from 2003 to 2009.

 

[bxmartin]

I'm not an economist or a math major, but I don't follow.

If I sell 100 widgets at $10 each with a 12% profit than I make $120
Then I increase my price by 10%
I sell 100 widgets at $11 each with a 12% profit than I make $132

How can I lose 45% of my 100 customers and not make less than I was before raising my prices?

I'm confused??

We have gone to WDW the last two years in a row both during the last week in August, and we had a great time both times. However, this year the parks were less crowded, now I am sure that wasn't because the prices were too low.

Here's an interesting lesson most people not in business don't know.

Let's say you sell "widgets" (any item or service) and your net profit on the item is 12% (that's typical for small business; it's substantially lower for larger businesses).

You raise your widget price by 10%

You are definitely going to have some people not buy the widget anymore (their "tipping" point).

What percentage of customers can you afford to lose to before your price increase reduces your profits to pre-price increase levels?

Nope. It's not 10% like many will believe.

It's 45%!!! Yep, you can lose almost half of your customers and you still will make the same profit as before your price increase. And, if you are offering a service instead of a product, you will work less and make as much money.

And the lower your profit margin, the higher percentage of customers you can afford to lose. At a 6% profit margin (typical of larger businesses), a 10% price increase means you can lose 62% of your customer base and still not affect your profits.

Studies have shown that the percentage of customers lost is approximately the same percentage as the price increase so a 10% price increase could indicate a loss of 10% of your customers.

Losing 10% of your customers with a 6% profit margin means you still will realize an increase of 140% in profits.

Now, all of the above is assuming that your costs don't increase. We know that's not true but even with increased costs a price increase is almost always a profitable move, even with a loss of customers.




____________________
Armand

 

[Demosthenes]

Very good point but I'm afraid it is worse than that. I save (on my computer) old receipts from online purchases.

In 2003, I bought 4 day park hopper tickets for $192 each (pre-tax). Buying in advance saved me $16 per ticket. That same ticket today costs $277 and there is no longer a discount for advance purchases. That is an increase of 44% (or 33% increase over the 2003 no advance purchase price).

I also saved old online menu prices from 2001. Assuming those are accurate, here is a comparison of buffet price increases from 2001 to now:

Chef Mickey's breakfast - 44% increase
Crystal Palace dinner - 45% increase
Akershus dinner - 57% increase

But:
Crystal Palace breakfast - 19% increase

I also compared the beef tenderloin dish from Chefs de France and found it increased 23% from 2001.

By means of comparison, inflation increased by 22% from 2001 to 2009 and 17% from 2003 to 2009.

Man! That Crystal Palace beating inflation by 3%...WHAT A DEAL!

 

[jcb]

Man! That Crystal Palace beating inflation by 3%...WHAT A DEAL!

I really thought hard about including that one. Now I'll get blamed if CP raises its prices.

 

[MM32830]

I'm not an economist or a math major, but I don't follow.

If I sell 100 widgets at $10 each with a 12% profit than I make $120
Then I increase my price by 10%
I sell 100 widgets at $11 each with a 12% profit than I make $132

How can I lose 45% of my 100 customers and not make less than I was before raising my prices?

I'm confused??

If you sell 100 widgets at $10 each with a 12% profit margin, you are correct that you make $120. This is because your cost for each widget is $8.80. Your profit per widget is $1.20 multiplied by 100 widgets is $120.00

The problem in your second example is that while you increased the selling price of the widget from $10 to $11, you also increase the cost of the widget. Remember that a price increase increases only the selling price of the widget, not the cost.

So, you are now selling widgets at $11 each but they STILL cost only $8.80 each. You profit is now $2.20 per widget and your total profit is $220 ($11 x 100 = $1100 - $880 = $220)

So, if you lost 45% of your customers, that means you would only sell 55 widgets at $11 each. Since you are now making $2.20 per widget, you profit on 55 widgets is $2.20 x 55 = $121, approximately the same as before the price increase.

Make sense?

End of ECON 101



_______________________
Armand

 

[DisneyKevin]

Remember that a price increase increases only the selling price of the widget, not the cost.

If you are raising the price of widgets....isnt there a possibility that the provider of widget raw materials might also be raising his/her prices as well?

Now....you might be growing widgets in your backyard.....but widget fertilizer will undoubtedly increase in price along with the cost of buying, operating and maintaining widget harvesting equipment.

And we cant forget the cost of packaging materials. We cant ship naked widgets and those prices are probably increasing as well.

We can also take into account that transportation costs have gone up so unless you are selling widgets in your driveway, you have to factor that cost in as well.

This all says to me that the 45% of the customers that have been cavalierly let go becasue they balked at the rising costs of widgets might be fairliy valuable after all and as someone smarter than me pointed out a while back....it's much harder to get a widget customer back than it is to keep a good widget customer happy.

This all means that you will probably have to have a widget sale or send out widget coupons or discount your widgets in some way.

 

[MM32830]

If you are raising the price of widgets....isnt there a possibility that the provider of widget raw materials might also be raising his/her prices as well?

Now....you might be growing widgets in your backyard.....but widget fertilizer will undoubtedly increase in price along with the cost of buying, operating and maintaining widget harvesting equipment.

And we cant forget the cost of packaging materials. We cant ship naked widgets and those prices are probably increasing as well.

We can also take into account that transportation costs have gone up so unless you are selling widgets in your driveway, you have to factor that cost in as well.

This all says to me that the 45% of the customers that have been cavalierly let go becasue they balked at the rising costs of widgets might be fairliy valuable after all and as someone smarter than me pointed out a while back....it's much harder to get a widget customer back than it is to keep a good widget customer happy.

This all means that you will probably have to have a widget sale or send out widget coupons or discount your widgets in some way.

Kevin Kevin Kevin.....

I suspect you have a Widget obsession. Because of this, I will have to raise the price of widgets in order to make the less affordable. Of course, I am doing this for your well being!

Of course, everything you say is possible but in the accounting world, every day stands on it's own. If you ever look at a balance sheet in a company's books, the balance sheet is generated for one specific day.

So, the day I raise the price of my widgets, my profits will increase but my costs will not. Of course, my costs will eventually rise at which time I will raise my prices again.

Of course it is always best to maintain customers but the point I wanted to make is that even though you will lose some customers (certainly not 45%), a price increase rarely reduces profits. In most cases, it always raises profits, even with a loss of some customers.

By the way, has anyone wondered why Disney raised their parking fee $2.00 this time rather than only $1.00? Is it possible they didn't want to charge $13.00 (13 is only good at the Tower of Terror).




___________________
Armand

 

[DisneyKevin]

a price increase rarely reduces profits. In most cases, it always raises profits

Unless it doesnt.

Then you have a problem.

 

[bxmartin]

If you sell 100 widgets at $10 each with a 12% profit margin, you are correct that you make $120. This is because your cost for each widget is $8.80. Your profit per widget is $1.20 multiplied by 100 widgets is $120.00

The problem in your second example is that while you increased the selling price of the widget from $10 to $11, you also increase the cost of the widget. Remember that a price increase increases only the selling price of the widget, not the cost.

So, you are now selling widgets at $11 each but they STILL cost only $8.80 each. You profit is now $2.20 per widget and your total profit is $220 ($11 x 100 = $1100 - $880 = $220)

So, if you lost 45% of your customers, that means you would only sell 55 widgets at $11 each. Since you are now making $2.20 per widget, you profit on 55 widgets is $2.20 x 55 = $121, approximately the same as before the price increase.

Make sense?

End of ECON 101



_______________________
Armand

It does now. Thanks for the lesson professor!!!

 

[fakereadhed]

What if I just want to park and don't want to buy any widgets?

 

[kbelle8995]

Man all these economics lessons are giving me a headache. Yet another reason I decided not to pursue that business degree. But let me point out that Disney is probably not paying its cast members more.

I used to be a cast member and I made minimum wage. That might not be the case for all and that was years ago
and things may have changed but I doubt it.

 

[robind]

While I dont agree with this basic statement...I have to ask...

Once poor Disney starts making money again, do you think they will revert to the already ridiculous $12 parking fee or do you think they will continue to try and suck every dime out of their guests pockets.

I also dont agree with the idea that this wont eventually turn people away. There will be a tipping point where Disney is going to suffer a backlash with these increases.

When oil prices increased, the airlines added checked bag fees. When the price of oil dropped the airlines certainly didn't drop the bag charges they have actually increased them.

So I certainly expect that the parking price will not go down.

What I do expect is that more people will be trying to find ways to avoid parking at the parks.

 

[LMO429]

I have to say I am not happy about the amount that Disney charges for parking, but they give you a lot more ways to work around paying it than other places in Orlando. We are considering going to Universal in December and the $12 (I am sure to soon be $14 also) for parking makes me crazy. At least if you stay onsite at Disney you get out of paying the parking fee. You know what you get if you stay onsite at Universal? $10/day added to your resort stay. Paying for parking at any resort makes me absolutely crazy. I can understand if I am staying in a city that has limited parking, but most hotels now just see it as a way to get more money out of you. If Disney starts charging parking for onsite resorts guest then I think I will be at my personal tipping point.

I agree with you.

and for $14 I expect my car to be vacuumed and washed as well

 

[lugnut33]

Like I said in another thread, eventually they will add a "resort parking fee".

What's sad is we seem to be talking more about raising prices than the magic. I'm sure for the bean counters though there's plenty of magic in raising prices.

 

[teskak]

Kevin, if you can put your Dream U had on, what has been your personal experience of these price rises on booking requests, particularly as they relate to the Cruise Line.

I recall when the European cruises were announced, Pete chucked a wobbly about the price of particularly the Northern European cruises and how they would be out of reach of middle America especially in this economy. Well how have the bookings been for these cruises? Have you heard if they are looking at discounting the fares on these cruises, say for the restricted groups like Military, Florida residents etc? I understand the Panama canal cruise is always popular, as well as the Christmas cruises (price inelastic) and the early price tiers are booked up quickly - what about the rest?

DCL seems to be an expert at the price gouging and putting in expensive cruises, is that working? They would have to be even more of a luxury than Disney World (not that I can comment as it is a 24 hour journey to get from Western Australia to DW and airfare is the really expensive component for me)

 

[DisneyKevin]

Kevin, if you can put your Dream U had on, what has been your personal experience of these price rises on booking requests, particularly as they relate to the Cruise Line.

I recall when the European cruises were announced, Pete chucked a wobbly about the price of particularly the Northern European cruises and how they would be out of reach of middle America especially in this economy. Well how have the bookings been for these cruises? Have you heard if they are looking at discounting the fares on these cruises, say for the restricted groups like Military, Florida residents etc? I understand the Panama canal cruise is always popular, as well as the Christmas cruises (price inelastic) and the early price tiers are booked up quickly - what about the rest?

DCL seems to be an expert at the price gouging and putting in expensive cruises, is that working? They would have to be even more of a luxury than Disney World (not that I can comment as it is a 24 hour journey to get from Western Australia to DW and airfare is the really expensive component for me)

We are not at the 90 day window. This is the point that deposits become non-refundable and it's the true test.

I believe we will see discounts on many of these sail dates.

Just my opinion.....

 

[teskak]

So are you thinking that at the 90 day window cruises in the Mediterranean and the Northern Europe might become cheaper. That is a whole lotta gamble then to fill the ship if you have to factor in the airfares and the cruises being from unfamiliar ports rather than the routine Florida departures...

Almost tempting