In the 1980’s there was something called “Two Dollar Tuesdays”. It was a promotion run by local theater chains that involved selling adult admission for just $2 on Tuesdays. $2 was almost half of the $4.50 admission at the time. When tickets rose to $5 the promotion became $2.50 Tuesday and, as prices kept going up, eventually just became known as “cheap tuesdays”.
It’s good example of using a hurdle in price discrimination – selling the same product to different people at different prices. It lets the theater selectively discount to people who are serious about saving money without cannibalizing sales of full price tickets to those prepared to pay full price.
Who’s most likely to go on Tuesdays? Teenagers and young adults that have more time and energy than money. They don’t mind going on a Tuesday night if it saves them money.
Who is less likely to go on a Tuesday night? Adults with jobs, who are already exhausted by Tuesday night. They’d rather pay full price on the weekend than struggle to keep their eyes open during the movie and again at their desk the next morning. And if you have kids it’s even harder.
That disparity creates an even bigger hurdle. The Tuesday shows are full of noisy teenagers that don’t stop talking or texting. This makes those showtimes even less attractive to anyone that can afford to pay more – personally I wouldn’t go on a Tuesday night even if it was free.
Does it work well for the theater? On Tuesdays they pack the house with teenagers that aren’t interested in paying full price, and are likely to be at parties on the weekend. And, since teenagers are generally less concerned about diet, they’re also likely to spend more on concessions. Overall there are enough factors to keep anyone who is willing to pay full price away, which means that the theater is not losing money by discounting to those customers unnecessarily.
On the weekend the theater is visited by those who are prepared to pay full price and wouldn’t dream of visiting on a Tuesday. They’re happy to pay a premium to have a better experience.
Cheap Tuesday isn’t just a hurdle, it’s a self-propagating hurdle that becomes even more effective once implemented. Other examples would include Black Friday, Boxing Day or Midnight Madness sales – the experience itself becomes so unpleasant that many people are happy to pass on the savings. Only those truly committed to saving money will brave the crowds and deal with the lineups.