The User Frustration
We have all been there. You walk into a PVR or INOX on a Tuesday. You are happy because you snagged a ticket for just ₹200. You walk to the concession stand, order a regular popcorn and a Pepsi, and the bill comes to ₹650.
You feel cheated. You wonder, “How can puffed corn cost three times more than a multi-million dollar blockbuster movie?”
As a consumer, it feels like price gouging. But as a Product Manager, if you look at the P&L (Profit and Loss) statement, you realize it’s actually a brilliant execution of Platform Economics.
The Unit Economics: Who Gets the Money?
To understand the price, you have to follow the money.
1. The Ticket (The Hook)
When you buy a ticket, the cinema does not keep all the money. They have a revenue-sharing agreement with the distributors and production houses.
- Week 1: The Studio takes ~50-55%.
- Week 2: The Studio takes ~42-45%.
- Week 3: The Studio takes ~30-37%.
After paying the studio, the cinema has to pay for the massive air-conditioning, the 4K projectors, the staff, and the prime real estate rent. The ticket sales often barely cover the operational costs. In product terms, the movie is the Customer Acquisition Channel. It is the “feature” that brings the traffic.
2. The Popcorn (The Profit)
This is where the math changes.
- Revenue Share: The cinema keeps 100% of F&B sales.
- Cost of Goods Sold (COGS): The raw cost of corn, salt, and oil is negligible.
- Competition: Zero. Once you are past the security check, you are in a Walled Garden. You cannot order Swiggy. You cannot bring chips from home.
The cinema is essentially a restaurant that uses blockbuster movies as a marketing campaign to get diners through the door.
The PM Lesson: Core vs. Ancillary Monetization
This model isn’t unique to cinemas. It is a fundamental strategy in Product Management called the “Razor and Blades” model.
- Gillette sells you the Razor handle for cheap (sometimes at a loss) because they know you will be buying blades for the next 5 years at a high margin.
- PlayStation often sells the console at a loss. They make their money when you buy the games and the online subscription.
- Printers are dirt cheap. The Ink cartridges are liquid gold.
Applying This to Your Product
Many PMs make the mistake of trying to squeeze maximum margin out of the core utility of the product. But sometimes, high barriers to entry (high price on the core product) kill your growth.
Ask yourself:
- What is my “Ticket”? (The low-margin hook that solves the user’s immediate need and acquires the customer).
- What is my “Popcorn”? (The high-margin add-on that captures the value once the customer is captive/loyal).
A B2B SaaS Example:
Imagine you are building a project management tool.
- The Ticket: The base software is free or very cheap ($5/user). This covers your server costs and gets teams hooked.
- The Popcorn: The “Enterprise Security & Compliance” module is $50/user. The cost to build it is fixed, but the value to the enterprise is massive.
Conclusion
The next time you begrudgingly tap your card for that ₹450 popcorn, remember: You aren’t just paying for corn. You are subsidizing the cheap ticket that got you in.
If cinemas charged the “real price” for tickets to make a profit without selling food, that ₹200 ticket would likely cost ₹800. And at that price, the theatre would be empty.
The Takeaway:
Sometimes, to make the product viable, you have to sell the ecosystem, not just the feature.