Tickets Are Worth Different Amounts to Different People
If you were riding on a train and you dropped a rock from the window of that train, it would appear to you as if the rock is falling to the ground in a curving arc behind you as you travel. If your friend were standing outside the train, facing the tracks, and watched you riding by when you dropped your rock, that rock would appear to her like it was falling straight to the ground.
Who’s right? Who sees what’s really happening to that rock?
You both are. It’s not a trick your eyes play on you or one of those patterns where if you stare at it for long enough, you see Jesus. You’re both actually correct in your perception of how the rock is traveling because the motion is relative to you.
I didn’t think of this example. I borrowed it from Einstein, but we’re going to use it, believe it or not, to talk about selling tickets. I call it the Theory of Pricing Relativity, and it goes like this: No ticket is “worth” a fixed amount. It’s only worth something relative to the person who might buy it.
When you say something like, “This show on a Saturday night in the P1 section should be about $85,” what you’re really saying is that for the typical person who is likely to be the audience for this show (we’ll say it’s a band called the Time Travelers), your intuition or information tells you that they would find $85 to be an acceptable price, or close to an acceptable price. And you might be right. You probably are. You’re very smart. And good looking. I should say that more often …
Anyway, let’s call the typical person in the group you just described Alex. You have a clear understanding of Alex and what she’s into and what she’s likely to pay. She knows the band, likes them and should place some value on seeing them. You think $85 for P1.
Alex has a friend named Emily, and Emily’s boyfriend Jermaine LOVES the Time Travelers. He’s also been out of work and really down in the dumps lately, and so when Emily hears that the Time Travelers are coming to town and she has a couple of extra tickets, Alex gets excited. So excited, in fact, that she goes to the cash machine and gets out $300 — the max the machine will let her take out — to hand over to her friend for the two tickets for her and Jermaine.
When she finds out that she only has to give Alex $85 each for the tickets, she’s thrilled! She was not only ready to pay $150, but excited about it.
They have another friend named Jeanie who’s never heard of the Time Travelers and really prefers theater to concerts. Before Alex tells her about the event, she literally values the ticket to the show at $0. She doesn’t know it exists! Alex sends her a message saying that she and Emily and Jermaine are going to see a band called the Time Travelers on Thursday, and she’s got an extra ticket if she’d like to come.
Now, Jeanie has heard about the band and the show, and it’s something she can go and do with friends. She watches a couple of YouTube videos of the band, including their one big hit, “Special (Like Relativity).” Not bad. Could be fun.
“How much 4 the tix?” she asks back.
“$85,” Alex replies.
But for Jeanie, the ticket is worth maybe $25, $40 at a stretch.*
Same show, same night, same venue, same seats, three similar people demographically, but three very different prices.
Who’s right? They all are.
*Let’s give the story a happy ending. Alex decides she’d love to have Jeanie along and gives her the ticket for $25 if Jeanie agrees to buy the first round. Everyone has a great time.