What's the rationale behind pricing of items you find in stores within national parks? Photo of general store at Lake in Yellowstone National Park by David and Kay Scott.
Have you ever wondered how national park concessionaires price the convenience items they sell?
Perhaps during the last visit to Yellowstone National Park you thought a bag of ice was overpriced, but beer seemed reasonable, at least compared to the prices you paid back home. Why did you have to pay such a high price for a quart of ice cream, while magazines and paperbacks sold for the same price at home?
Kind of mysterious, isn’t it?
Actually, the pricing isn’t mysterious at all. National Park Service concessionaires are required to price merchandise using published industry gross margins - the difference between cost and the price charged, divided by the price charged. If the average gross margin on candy is 50 percent, a concessionaire that pays 40 cents for a bar of candy would price the same candy for 80 cents.
A related statistic is the markup. The markup is the difference between cost and price, but divided by cost rather than price charged. In the case of the candy, the markup would be 100 percent. In other words, the concessionaire prices the candy at double its cost.
Markups and gross margins are different for different product categories. For example, a dispensed liquid beverage such as coffee has approximately three times the markup percentage as packaged sweet snacks. Markup regulations do not apply to merchandise already marked with a manufacturer's suggested retail price (MSRP).
As an example, suppose a concessionaire’s cost for a quart of ice cream is $2. The markup percentage allowed on packaged ice cream and novelties for 2012 is 92 percent, so the concessionaire would add 92 percent to its cost and price the ice cream at $2 x 1.92, or $3.84. The markup percentage for packaged bread is 46 percent, so a loaf of bread costing the concessionaire $2 would be priced at $2 x 1.46, or $3.92. Rounding is permitted, so the concessionaire could sell the bread for $4. However, a loaf of bread marked with a MSRP of $4.19 would trump the allowed markup and be sold at the higher price listed on the package.
Standard retail pricing practices such as using prices ending in 99 cents are permitted. Variances from published markup percentages are sometimes permitted, but only after approval on a case-by-case basis by the park superintendent. Picture Delaware-North, the concessionaire at Yosemite, asking the park superintendent if it can raise the price of a jar of jelly by 15 cents.
If concessionaires are required to use average industry markups, why do items sold in national park concession facilities often seem so expensive?
One reason is concessionaire costs are likely to be quite high. Can you imagine what Glacier Bay Lodge pays for candy bars? Or how much isolated North Cascades Lodge at Stehekin pays for a quart of ice cream? How about the price Forever Resorts at Big Bend National Park pays for a loaf of bread?
These are the costs subject to the standard industry markups listed below. The same markup percentage on an item that has a high cost will result in the item having a high retail price for national park visitors.
Also, if you are like us, at home you try to buy items when they are on sale. Who hasn’t stocked up on Coca-Cola when it is on special at four 12 packs for $10? When is the last time you saw beer, ice cream, bread, or candy bars on sale in a national park? Have you ever seen a sign in a store at Yosemite that says “Stock up and save”?
Buying convenience items in a national park means you will always be paying full retail. About the only things we have seen marked down in a national park store are faded T-shirts. Even distressed bananas generally sell at full retail.
Category Markups To Be Used By National Park Concessionaires During 2012
Category..................................................Markup Percentage
Cigarettes......................................................18%
Other tobacco.................................................46
Packaged beverages (non-alcoholic).......................67
Beer.............................................................26
Wine............................................................39
Liquor..........................................................35
Edible grocery.................................................81
Non-edible grocery...........................................73
Perishable grocery............................................55
Frozen foods...................................................82
Packaged ice cream...........................................92
Candy...........................................................106
Salty snacks.....................................................63
Packaged sweet snacks........................................49
Fluid milk products............................................43
Other dairy and deli...........................................67
Packaged bread................................................46
Health & beauty care.........................................113
General merchandise..........................................54
Automotive products..........................................87
Publications....................................................29
Ice...............................................................364
Food Service
Food prepared on-site.........................................115
Packaged sandwiches..........................................57
Hot dispensed beverages......................................148
Cold dispensed beverages.....................................94
Frozen dispensed beverages..................................98
Source: NACS State of the Industry Annual Report, 2010 Data as contained in Memorandum from Chief, NPS Commercial Services Program.
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Comments
Thanks for the informative article. Very clear.
Danny
In addition, retail businesses located outside of park boundaries are not subject to the same price ceilings that park concessionaires are restricted to, which is why items bought outside a park are often even more expensive than those same items bought inside the park. Many of these external businesses prey on the lack of awareness of park visitors who assume that they will be gouged inside the park and naively make a run out of the park to make their purchases.
That is so true. I worked for Hamilton Stores in Yellowstone and the blue enameled cookware that was sold in our camping department was about 25% less that in Cody, WY. Also the beer was usually cheaper than in West Yellowstone, MT . I would often hear parents say" We don't want to buy that here. We will get it when we leave the Park".
Do transportation costs affect prices in parks? Some of those parks are awfully remote and it does cost money to haul candy bars all the way out there.
Fantastic article, very well written and informative. I think it's valuable for park visitors to understand these types of relationships between concessioners and the NPS as well as associated pricing regulations. Thanks for posting!
High transportation expenses result in a higher cost to the concessionaire, thereby resulting in a specific markup producing a higher retail price for visitors. Imagine the cost of transporting milk to Big Bend National Park's small camp stores that are 110 miles from Alpine, the nearest town of any size. Once we watched as a UPS truck arrived at the park's Chisos Mountains Lodge and wondered how much money UPS lost making that delivery.
Thanks for the explanation, but I'm still going to gripe about the prices, anyway. I noticed that one of the lowest markups is for beer. The highest is for ice. I guess they make up on the low markup on beer by making you pay to keep it cold. LOL.
The highest price difference that I remember paying (that is, what we were 'used' to paying at home vs what we paid in the park) was for bottled water in Yellowstone. I don't remember the exact price but I do remember it was over twice as much for an 8 pack of 16 oz bottles as we paid per 'flat' of 36- 16 oz bottles we brought in our RV from home. It floored us because we had expected to pay through the nose for fresh produce (which wasn't priced too bad) but not water! I realize I'm comparing apples to oranges, since theirs was Dasani (a 'brand' name) and ours was Costco brand. Too bad the concessionaires can't clip coupons or shop at Costco, or better yet, hire my 89 year old Mom to shop for them. Mom can sniff out bargains and sales on groceries better than a hungry wolf can sniff out prey!
BTW-my husband was delighted to find out that it was cheaper to drink beer, and a good microbrew at that, than water. Any old excuse......sigh.
Anyone else remember a particular 'sticker shock'?
David, perhaps you can explain why a 20-ounce bottle of Coke costs the same at Glacier Bay as it does at Yellowstone???
If a 20-oz bottle of anything costs the same in two different parks, it's because one of several things. The cost to the park concessionaire may have been the same or super close, and the same mark-up applied (with rounding smoothing out the slight difference). The manufacturer may have had a retail price printed on the bottle (not likely for beverages). The Concessionaire may have chosen to sell the beverage at an attractive price (like 99 cents) instead of the (higher) actually authorized rate.
Just for the record, a concessionaire may always charge less than the authorized rate for an item. It does happen, although I know lots of folks wish it happened a lot more.
I have a somewhata related question. On a geology field trip with a group of teachers, we stopped to have ice cream cones at a national park concession. As all 30 of us went through the line, each of us had no change, only bills, with which to pay. The cost of the cone was something-99 cents plus tax. That meant that everyone of us had to receive almost a dollar's worth of change. Would it not be simpler if the price were just adjusted so that it came to a rounded dollar value? Many travelers don't carry change. Just a thought....
The reason for the odd pricing is that the concessioner is only allowed a certain % of mark-up for each item and are not allowed to round up to make the price come out to the nearest even dollar amount. Keeping in mind that the concessioner is there to make money it makes no sense for them to round the price down to make it come out to the lower dollar amount either.
How about a roll of TP?? How come it's so expensive at Yellowstone?? LOL
Kurt, regarding your question about a 20-oz bottle of Coke costing the same in Glacier Bay and Yellowstone; I am guessing Glacier Bay was using the Coke as a loss leader in order to get you to buy more $5 bags of potato chips and $2 Twinkies.
Hi David and Kay. Great article but please check your math on the markup percentage example for bread. You state that $2 x 1.46 is $3.92. Actually $2 x 1.46 is $2.92. Other than that, very nice explanation of the pricing of items in NPs.
Sounds like I paid too much for the bread.
Many "gateway communities pretty much serve a specific audience and can overcharge because the free market allows them to. I remember going to the McDonald's in West Yellowstone and noticed that not only were the prices considerably higher (about the same as Manhattan) than other locations, but that the "Dollar Menu" was conspicuously absent.
I do remember attending a ranger talk on water sources at Mt Rainier, and I figured that I would get a can of Rainier Beer (a pretty standard bland beer) since it's supposedly made with local spring water. It was less than a dollar. I think I would have paid much more for one at a convenience store outside the park.
And although I wouldn't condone it (wink wink), I understand that some people sneak "heavy beer" and liquor into Utah. I saw people drinking some standard ABV beer on the porch of Bryce Canyon Lodge. I'm thinking that enforcing Utah alcohol laws isn't a priority with NPS. I think Utah's rules are confusing as heck, since someone carrying alcohol in their vehicle (even if not for consumption in Utah) is technically in violation of their laws. The only exceptions are for one liter duty of free liquor brought into the US or alcohol brought into Utah during a move - with specific state approval, the alcohol tagged with a state label, and a fee paid to the state. They know it's happening anyways. They head over to Nevada, Wyoming, Idaho, and Arizona to buy their booze anyways.
http://www.abc4.com/content/news/state/story/With-DABC-closures-Utahns-h...
Hi from GA. . . I was actually surprised by how reasonable prices were at YENP last summer. Our family spent a fair amount of time perusing & purchasing souvenirs and I can't complain a bit about the prices. Anybody who has priced items in an airport gift shop OR on the Navaho reservation would agree that Yellowstone trinkets were quite reasonable. Regards, Craig
Why can't anyone just tell us now what the prices are in Yellowstone or any other park? I mean there's a lot of hinting going on, but no real information. Are you saying that a bag of ice that I get now for 99 cents is going to be $4 at Yellowstone? That's something people would want to know.
Everyone commenting here has visited at different times and prices change over time. I haven't been to Yellowstone for more than five years. The only good point of reference is how much things cost outside of the park at the time.
As for the cost of a bag of ice, I guess someone else here could comment. I remember paying $3 for a 7 lb bag at Yosemite back in 2009. That's probably about $1 more than outside the park. Also - it wasn't trucked in or anything. It was made on site (it's not that difficult to bring in a commercial ice machine), and there was even an automated bag dispenser outside the Yosemite Village store if you wanted to buy it after hours.
There are literally hundreds of examples. I think it's probably not going to do much good to try and list everything.