Why Is the Price of Alcohols in Clubs More Expensive Than in General Shops?

Task A: 500 Words applied Economics Task

Question: Why is the price of alcohols in clubs more expensive than in general shops?

Clubs and General Shops have the same alcohol products; however, the prices are different. If they both supply the same goods, why do general shops sell much cheaper than clubs?

The reasons are first of all, there is only one supplier in club. Second, the source of profitable for shop is greater than club.

People go to clubs for relaxing, dancing, listening to music or drinking. They are not allowed to bring any beverage to the clubs; therefore, consumers must buy from them if they want drinks. Buyers have no option to choose supplier but they can decide whether to buy or not. For example, if they agree with the price that the supplier have determined, the alcohol will trade by the amount of demand. In this moment, it called “Demand and Supply Relationship” as the quantity of demand and supply meets with the price of the goods. In this stage, Clubs play the role as “Monopoly Market Structure”. They control the price of items also according to their popularity. It means that, if the brand name of the club is more valuable or well-known comparing to other clubs then the price is a bit different. Still, there are customers like to enjoy that place even if it is expensive.

        On the other hands, they go to general shops only for buying goods, so shops are like “Perfect Competition Market”. Their strategy is to get less profit but to have more purchasers. They might face to the loss if they set up the price much higher than their competitor because the consumers have a choice to get from the cheapest place.

        Another reason is that, the source of profitable for the club is less than shops. Mostly, clubs could earn their profit from selling Alcohols like Cocktails. Moreover, some customers are only going for dancing without spending their money on drinks. Unlike, the shop, they will earn profit from almost every customer that go into and they also sell many others category like food or household products, etc. Thus, it makes clubs mark up their price two to three times higher in order to cover up their expenses.