Monday, January 25, 2010

All-Inclusive Wedding Packages

One of my current main projects has led me to do research on wedding venues. One of the most puzzling things is how many venues list cost per person. Consider this weddings at sea service (we're not using it, but it's a good example). It costs $145 per guest.

Among the items included are the boat rental and the captain. However, these things would cost the company the same amount of money whether the guest list included 50 people or 300. This is known as a fixed cost.

Conversely, items that vary in price, such as food (each additional mouth costs more money to feed), are known as a marginal cost. So why are these lumped together?

Additionally, many venues quote a cost per person but specify a minimum number of guests. This can lead to some strange incentives: as you approach the minimum, inviting an additional person is essentially free, but once you reach the limit, you are paying an extra $145 per guest, even though the direct costs to the venue of that additional guest is a fraction of that.

I hate to resort to numbers psychology, but maybe $145 per person for 150 people sounds cheaper than $50 per person plus a $14,250 flat fee to rent the reception hall, even though they are functionally the same. But notice that in the former case, additional guests after the 150 net the venue substantially more profit.

Some places offer all-inclusive packages, while others charge you for every tiny rental, up to the napkins (65 cents per guest at one place we're looking). I'd prefer to be nickled and dimed for every little thing, as the all-inclusive package is likely to contain things that I don't want. However, perhaps all-inclusive operations are cheaper to run, as they don't have to adjust to every whim of their clientele, so they may have good deals as well.

I'm wondering if the industry has an incentive to make it hard to compare venues. Once you research a venue enough to solicit more information, you might begin seriously picturing yourself getting married there. It's to their advantage that you don't see solid price numbers until after you form an emotional attachment.

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