Another Spa Pricing Mystery
The Dutch spa I blogged about charges a lump sum for a day ticket. The German spa charges by the hour, although after four hours the price is that of a day ticket. Since the Dutch spa used to price per hour too, presumably something led its owners to believe that they would profit more from a fixed price.
I can’t take more than three hours of sauna and swimming, but I sure love the first two hours-high total utility, very low marginal utility. If I’m not totally atypical, perhaps the owners realized that they could extract more consumer surplus by switching to the fixed price. Regardless, the difference in pricing between the two spas altered my behavior and probably that of others: We got out of the German spa in two hours, avoiding having to pay an extra $2 per person, while we stayed three hours at the Dutch spa, paying no extra for the third hour.