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Comment by etothepii | Hacker News Reader

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etothepii·

While this might maximise the amount of money the organisers get for an event it doesn't handle variable fixed costs.

That is I might need no capital at all to run my tour if I sell tickets at a highish (but sub-optimal) price early on.

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What are the variable "fixed" costs? And when are they incurred?

This is about revenue maximization, not user enjoyment maximization or fairness maximization.

Ultimately I don't think most artists actually want revenue maximization - they're probably far more interested in fairness maximization in ensuring their fan base of all economic strata get to see them live.

As in if I know I will make $1m in sales I might choose to use better audio equipment.

If you're selling out shows at double the price, wouldn't the next step be to reduce the sound quality so you can play cheaper shows with a higher profit?

This is a really interesting question. I feel like I see it with airlines all the time. The question that comes eventually though is do people notice and does a culture of penny-pinching trickle down into an inferior product that makes people resent the high price enough that sometimes they won't pay it.

I mean that's literally yield maximization - you don't need to capture all the demand for a given good or service. You just need to capture the right mix of it. I would broadly say that I don't think anyone who goes to a typical Arena concert is making their buying decision on the audio quality.

The bar for good enough is pretty low.

I don't think anyone would make that decision; the bar for good enough is pretty low, and if you won't get any incremental revenue (no one is selling or advertising on the various parameters of audio quality), why would you spend that money?

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