I struggle sometimes with estimation questions and I am trying to make sense of this one. Since the season pass costs 1200 and it is assumed customers would have on average 10 visits per season. wouldn't it make more sense for customers to get daily pass instead as it will cost 800 over several tickets than 1200 for seasonal one?
Back to overview
Be the first to answer!
Nobody has responded to this question yet.
Hey,
Your doubt is logically correct, and you actually spotted something that sounds weird: if the average visits are 10 a year, why are customers spending 1200$ for unlimited visits rather than just 800$ (i.e., 10 times the $80 single entry ticket)?
However, the reality is that it is not uncommon in this type of businesses to see these situations. People often overestimate how often they will use a season pass. Let's use these assumptions:
- A few season ticket holders might do only 1-2 visits a year (e.g., they move to another country, they get hurt early in the season, they get too busy with work). Let's say 15-20%
- A few others might get close to the 8 "threshold" (say 6-7 visits): when you buy the season pass, you definitely expect you'll ski much more than you actually can (even without injuries or work issues). Let's say 40-45%
- Lastly, a few others will get their full worth of 15-20 visits. Let's say roughly the top 40%
If you compute the numbers above, you'll see that (0.18 × 1.5) + (0.42 × 6.5) + (0.40 × 17.5) = 10.0 average visits.
We can discuss of whether my percentage assumptions are correct or not: I picked on purpose some numbers that would yield a 10.0 average to be consistent with the case (and I agree with you: the true average might be slightly higher than 10). However, you can see how we are not too far from a real-case scenario!
Hope this helps!
Tom
hey!
I would argue: If the season pass costs 1200 and the average customer only visits 10 times, then the effective cost per visit is 120. A daily ticket costs 80, so 10 daily tickets = 800, which is cheaper.
So yes, for someone who visits only 10 times, the daily pass makes more financial sense. A season pass only becomes worthwhile if a customer visits more than 15 times (because 1200 ÷ 80 = 15).
Best, Alessa
