Why Movie Popcorn Costs So Much – And Why It Should

By, Sharon on Tuesday June 08, 2010

By Frank Kenna

A $5 bag for something that only costs 55 cents? A recent op-ed piece in The Wall Street Journal examined the “Exorbitant, Outrageous” price of popcorn in movie theaters.  The author, Richard McKenzie calculated that it’s not such a bad deal.  After all, if you made it yourself, and value your time at $20 per hour, it would cost you over $10 between prep, cooking, oil, kernels and cleanup.  And then you have to smuggle it into the theater without getting busted by the 16-year old ticket-taker! 

This logic follows with many products.  While a can of Coke may only cost a few cents to make, consumers are quite willing to pay a buck or two.  The same holds true for a newspaper; the cost of materials is pennies, but the cover price can be $2 or $3.  For example, a quick look at The New York Times 2009 statement of operations shows that the raw costs per year are $166,000,000.  Many people would compare that with the yearly sales of $2.4 billion and deduce that they’re making a lot of money.  But hold on… the raw materials are only a small part of the picture.  When other items such as salaries and overhead are added up, the TOTAL operating costs were $2.3 billion.  In other words, those raw costs tell only about 7% of the story.  Just like popcorn in theaters, the raw materials are only the beginning, but they are most easily visible to the consumer who in turn often draws the wrong conclusion.

This is the same dynamic that we see in publishing workplace communications.  The paper and ink that goes into our print editions, or the electrons that flow over the Internet for our digital editions, are only the start.  The expensive part is the research, design, overhead and intellectual capital that go into the product. 

When managers consider implementing an employee communications program, they often focus on the raw costs, thinking that a PC, printer and a copy of Photoshop will get them going.  But they’re focusing on the wrong thing.  It’s all about the creation of the content… who’s going to do that?  Where will the experience, education and expertise come from?  Who will produce the dozens of pieces needed each month to produce an effective workplace communications program?

Focusing on the raw materials of workplace communication is like focusing on the raw popcorn kernels at the theater.  It’s what comes next that really counts. 

Thanks!