Question

In March, you bought 4 tickets to Lady GaGa's concert at Fenway Park in July for $125 each. Due to Covid issues the concert was postponed to August 7. You are unable to go and want to sell your $125 ticket. Whoever you sell the ticket to, you will have to send to by mail for a postage cost of $15 (with postal insurance). What is the minimum amount you would be willing to sell the ticket for? Explain your answer.

Answer 1

there are two scenario which can be analyzed ahead-

total cost of the ticket =$125(one ticket)

• our first target should be to recover the money invested in the ticket at cost to cost basis,because people would resist to attend the show psychologically.instead of earning profit we should offer the consumer a price which would help us to get our money back which is $125(for one ticket)
• first offer should be made for $140.in this offer the cost price of ticket would be recovered and further the mail charges would also be paid by the consumer.the cost of the ticket would be get back at break even level.this is the most favorable deal if succeed.

if the deal is not fulfilled then the loss bearing capacity may vary person to person and we can mere estimate a calculated deal.

• second offer should be made for a price of $125,where mailing charges would be borne by us.this deal is most likely to be fulfilled because the consumer would get the ticket of the show at their door step at the cost price.

1. these two offers can be made where the first offer should be our priority and second offer should act as a back up plan.
2. the situation may change if the show increases/decreases their original ticket price and thus the price offered would be different.