Industries pricing themselves out of the market

Miscellaneous and Personal Stuff I Must Share
1

You’ve read my rants about the price of Cessnas, and my opinion that Cessna is putting itself out of business by pricing their airplanes far out of reach of their target market. I’ve written that a brand-new 1982 Skyhawk was more affordable for a minimum-wage worker then, than a new Skyhawk is for someone making a middle-class salary today. I found this article from 2011:

Cessna replaced their 152 model with the LSA-qualified 162 Skycatcher at an introductory price of $110,000. Then they hiked the price, and then they added $20,000 just because they wanted more money. People were not willing to pay that much for an airplane that only had payload enough to carry two ‘standard’ adult males – 380 pounds. I think the ‘standard’ American male masses more than 170 pounds nowadays. And then there was the decision to build the plane in China, which made a lot of people swear they’d never buy one. In October, Cessna announced the Skycatcher has no future. But the main reason Cessna isn’t selling airplanes is that they’ve priced them higher than their target market can afford.

Now it looks like ski resorts are pricing themselves into boutique status.

Like the aviation industry, ski resorts are not supporting their core customers.

Neither flying nor skiing has ever been cheap. But they were accessible to people who had a few extra bucks to spend on recreation. Obviously I’ve focused on aviation becoming a Rich Man’s Pastime in my past posts. I did notice lift tickets becoming more and more expensive over the years, but haven’t paid that much attention since I haven’t been skiing in over a decade.

Another thing that had been, while not exactly cheap, at least accessible to a family as a ‘treat’ was a trip to Disneyland. Now, a ticket costs like a hundred simoleons. Last time I went, the park was open 8 hours, and I spent most of my time standing in lines. I got on four rides. You think the old E tickets were expensive? At today’s prices, it’s $25 per ride. (Plus parking, of course.)

ISTM that businesses or industries are destroying themselves by getting rid of their core customers. Can anyone think of others beside the ones I’ve mentioned?

2

Whatever you think the target market for Disney World is, if they are mobbed pretty much year round, they aren’t pricing themselves out of the target market as THEY see it.

3

Just been to Disney. Tickets cost about the same as slightly pricey concert tickets, and the park was open 13 hours. The longest lines were about an hour at midday, but 15-30 was typical. Got in lots of places with a 5-10 minute wait.

No idea on skiing and airplanes. Is it really necessary to go to a resort to ski? Can’t you just buy the equipment and go?

4

If you do alpine skiing for most people you have to travel somewhere with good skiing conditions - I mean, I live in Indiana, we barely have speed bumps, much less hills, much less actual mountains. So at the very least you’re going somewhere that actually has snow-covered slopes, so there is always a transportation cost, unless you happen to live on a mountainside already. Then there is the issue of getting from the bottom to the top of the slope. Skis are great for going down hill (hence, “downhill skiing”) but suck at going up hill, hence the invention of tow ropes and chair lifts but those tend to be found at ski resorts, which charge you a fee. Some people have gotten around this by, say, chartering a helicopter to take the to the top of a mountain but then you’re combining the expensive hobby of skiing with expensive aviation…

The logistics of alpine skiing are what led me to switch to nordic skiing some 35 years ago. Nordic skiing does really well on flat land, which my area has in great abundance, and tow ropes, chair lifts, and the like are in no way needed. That sort of skiing is very much buy the equipment, strap it on, and go… although there is a lot to be said for groomed trails and a heated club house with hot chocolate to sip afterwards. Still, the fact that I can go out to my local park and ski with abandon, no fees required, gives the nordic ski locations some competition and, I believe, helps keep prices reasonable.

Actually, I spent $88 dollars on my skis, boots, and poles 35 years ago and pretty much haven’t paid since, except for the occasional fee to use groomed trails (usually under $5) and the purchase of such things as wool socks, hat, and gloves, which I would buy anyway. My county park district provides groomed trails for free, and I can take a thermos of hot chocolate along with me.

Regrettably, there is no such bargain in aviation. I got in at the low end of the price range but it still easily ran me $5-10k a year and the prices have only gone up in the 6 years since I last flew. I’m hearing $8-16k a year for what I used to do, and I’m only making about $15k a year these days.

This has a lot to do with my headset and log books are in storage but my skis are propped up next to my front door waiting for snow.

5

A few points about skiing. I think one of the big game-changers with skiing is the high-speed detachable lifts. The ski areas that haven’t installed many (or any) of those IMO have mostly just kept up with inflation, ticket price-wise. We have a little local hill that’s about $40/day and it’s got some great terrain (and cheap beer at the lodge) but you do spend a hell of a lot more time on the lift than you do at a pricier ski area that has the high-speed lifts. If you were spending your vacation time to go skiing and want the most runs for your money, an expensive resort is probably a better value.

The other thing is that at least out in my part of the world, the season passes are still pretty reasonable, even at some of the bigger mountains. If you can pony up the cash ahead of time (and especially if you buy 'em pre-season) they usually end up paying for themselves after only a few days on the mountain. I think that a lot of it is set up to get the maximum bucks out of the rich dilettante skiers while still making it more or less affordable for the regulars.

Also, regarding the “replacement skiers,” most mountains make it cheap for kids to ski, and sometimes incredibly cheap. They definitely try to get you hooked young.

Backcountry skiing is actually getting a lot more popular, I suspect partly because of high lift ticket prices. One of the fancier mountains I ski at sometimes actually has a designated trail for people using ski skins to ski up the mountain, at which point they can ski back down for free. But of course, that takes them most of a whole day of very hard work to do what takes the people on the chairlift about 10 minutes.

6

For downhill skiing you pretty much have to go to a ski area, and most of them are resorts. Some are still ski hills with lifts, a lodge, and few additional amenities, but the rest are all resorts with significant lodging, amenities, restaurants, and additional facilities for non-skiers (ice rinks, water parks, shopping, spas). Lift tickets at most places are between $75 and $100 per day, but the real money is in lodging, food, etc. The ski areas want you to stay up there for several days - they make much more money on overnight guests than they do on day visitors. So they are willing to give up day skiers who can’t pay the price if they are filling their rooms with families who spend far more money. The actual ski hills are usually break even operations - that’s not where ski resorts make their money.

Now, if all you are interesting in is going downhill on skis you can buy telemark or alpine touring gear, a pair of climbing skins, avalanche gear as needed, and head into the woods to climb up the nearest mountain. But most folks don’t have the skill, interest, or access to terrain where that makes sense. And the gear still costs around $1500 to get started. I see more people in the woods now then I ever did, but it’s still not crowded out there. But the skiing is very different. I’ll get 2-3 runs a day, compared to 12-15 at a resort.

Cross country skiing doesn’t require nearly the same gear or infrastructure but most folks ski on set tracks at cross country ski areas. They’re not the same sort of cost as downhill (day passes rarely cost more than $30) but far fewer people are interested in doing so at a resort.

7

According to a recent thread, American brothels in Nevada. They’re asking upwards of a thousand dollars for something people can get in town for a few hundred.

8

Regarding skiing, there’s an article in the New York Times today profiling several families who lost a lot of money in the Bernard Madoff Ponzi scheme. One couple downsized to a house in Vermont and, the article mentioned, volunteer as hosts at a ski resort in exchange for free skiing. In college, the most popular club was the ski club, which offered discounted lessons and equipment to rent or borrow. As someone mentioned, many resorts offer season passes that are a good deal if you go often enough.

There was also a flying club, through which students could take flying lessons cheaply. And the friends I know who fly as adults do so through flying clubs that own the planes collectively, rather than owning the plane individually.

Golf is another sport that’s considered upper-crust, but my brother’s father-in-law who retired as a heavy-equipment operator is an avid golfer. He doesn’t have a lot of money but does play golf a lot. (He also has a part-time job on a golf course.)

What about yachting and sailing? Well, lots of kids hang out around the marina, volunteer to help people with their boats and join school clubs or Sea Scouts.

And you mentioned Disneyland. Now, I’ve never been there, but went to Disney World with my brother and his family a few years ago. Yes, the tickets are about a hundred bucks a day (although you can get package deals to get this cheaper), but the park is open most of the day and the ticket includes all rides and attractions. And all of the live shows and rides are first-class. Nothing is second-rate. So it’s a little pricy, but it’s not something you do every year. It’s a special treat.

9

And you often need to stay there for several days - mountain skiing happens in the mountains - it isn’t an easy day drive from big cities to most resorts - the exception is that you can ski for a day out of Boulder or Denver (and maybe there are places on the East Coast) but its a long day by the time you drive up into the mountains from Denver, ski for the day, and then head home.

We have a nice ski hill twenty minutes from the house - my son boards and my daughter skis - she actually races on their team. But it isn’t mountain skiing.

10

In the case of both airplanes and ski resorts I wonder just how much of the price is due to insurance premiums and legal costs.
Crash your brand new airplane into Mr. Smith’s house the chance of a lawsuit is high.
I would guess the same is true for injuries on a ski hill.

11

Aluminum and Vinyl siding used to be an affordable way to fix up a neglected home with peeling paint. You could dramatically increase curb appeal and the value of the home. 25 or even 35 years ago a lot of people got aluminum siding. My parents got it for their home and my grandmothers home.

I was absolutely shocked at what my vinyl siding cost in 2004. 10 grand. I nearly said screw it and went with paint. I started noticing then that its rare to see the siding installers in my lower income neighborhood. The only homes I see with siding have the old aluminum stuff from the 60’s & 70’s. 10 grand is a lot for a 75 grand home. I’ll never get my money back when I resale.

Siding has become a luxury item.

12

Tickets to major league sporting events. Football team owners may argue that $200 tickets are justified because a team is only playing eight home games in the regular season. But then you see baseball teams charging $30 a ticket, NBA teams charging $50 a ticket, and NHL teams charging $60 a ticket and these sports all play dozens of home games in a season.

The owners may be figuring the big money comes from television and merchandising - but where do they think the audience is coming from? What happens if the fans stop feeling any connection to the teams and stop caring about the sport? The owners should see stadium tickets as an investment in building up support of the team and the sport and sell them as cheaply as possible.

13

The lawyers have nearly sued plane builders out of the US. I’d think, one could go out of the country and find a lot better deal.

14

Professional sporting events and pop/rock concerts.

Golf priced itself out of the market for me years ago (time and interest were other factors). Greens fees for good courses (not to mention equipment and other costs) make it a pricey hobby (and perhaps not coincidentally, the sport has been declining in popularity in recent years).

There’s an article in today’s N.Y. Times about golf courses going out of business and selling off the land for housing developments. That’s causing great angst among people who bought homes adjoining courses, expecting pastoral living :dubious: plus easy golf access. Now they’re going to have neither.

15

I know a guy who went and his brother paid, according to him it was $500 USD.

16

On one level, I agree with your :dubious:, but at the same time I definitely empathize with the people who bought the houses near golf courses. ‘Pastoral’ can mean really living in the country, in which case you need to deal with being too far from town to ever walk anywhere and close enough to real wild lands that you need to deal with wild animals. It can mean septic tanks, wells (and/or hauling water to a cistern with the big truck you now need), shitty phone and Internet, and potentially a worse school district if you’re really far out and still need to care about such things.

It can also mean living just far enough from downtown you don’t have to listen to much traffic and you get to have a yard (a maintained yard with a garden perhaps, which is hard if you have wild animals traipsing around) but you’re still on city water and sewer, city electricity, can get a good ISP to hook you up to a high-speed connection, and can walk or bike somewhere other than deeper into the countryside.

So ‘pastoral’ might be a stretch, but living in a green space within city limits has its advantages.

17

There’s a lot of stuff that I don’t understand about sports, and this one is either at the top or near the top of the list. What’s wrong with demo games, or some sort of additional games in a season? If you get people into the arena, you’ve got a target audience to sell all sorts of souvenir junk to, and junk food. If you make tickets affordable enough that the parents (or at least one parent) will bring little Johnny or Suzy to the game, what are the chances of selling everyone in the family a frozen drink, a corn dog, and one or more caps or foam fingers or whatever? If you can convince families that sports events are a great way to spend family time together, you can build up a habit.

18

  1. Bad idea to combine skiing and airplanes :smiley:

  2. Well, to ski, you do have to go to a place that has slopes and lifts (and they’re called “resorts”). While you don’t have to stay at the resort by any means, they’re often far enough from other stuff that you have to stay nearby at least.

  3. Disney: you obviously did not go during peak times, which means any time kids aren’t in school. For a popular ride, the lines are going to be 1-2 hours long during the summer, Thanksgiving week, Christmas break, spring break… We keep saying “October 2015”, meaning we’re going there then as our youngest will be in college and old enough that the authorities won’t come after us if we go without her :).

We went in October 1987 and had a WONDERFUL time - no lines (10 minutes for some rides). We have been 3 times since then, with the kids, all during “kids are on break” times, and it was a miserable experience. When you spend 12 hours in a park and ride 4 rides, it’s not a good thing.

19

If the middle class is increasingly splitting up into very rich and very poor, a reasonable strategy for businesses that once catered to the middle class is to increase their prices and try to serve only the very rich. That’s not pricing themselves out of the market, it’s adapting to changes in the market. That could be what’s going on in some of these industries.

20

To answer Johnny’s question:

Look at the prices of mid-level boats (runabouts) today. While I was in the dealership looking for a part, I glanced at the price on a mid-level* direct-drive skiboat, similar to the one I bought for a mid-twenties price in 2000. $69,000 (without a trailer). A 23ft open-bow Sea Ray for driving the family around the lake? $79,000. I got curious and looked up the 2014 model of my small (24’ cuddy) cabin cruiser. $131,000 (trust me, mine’s nowhere near that).

A few more, while I’m at it… You know those 4-wheelers you see hunters hauling around in the fall? High end models easily top 10 grand. A hunter was showing me his new one this season (11K) and claimed it had power steering. Seriously? On a little 4-wheeler that fits in the back of a truck?

And finally (more boats), I visited with a bass-fisherman who was showing me his brand-new top end bass rig (Ranger, I think). He’d paid over $80 grand for it. Add his 50-grand Diesel dually and you have $130K invested before even buying a fishing rod.

The poster above has it right, I think. They’re only aiming their products at the affluent.

*Not a Mastercraft or Nautique, Tige iirc