I'll give you $20 if you'll give me $2.50

Let's talk about Chuck E. Cheese for a minute.

I've started affectionately calling him Charles Edward Cheese III lately, just to be silly.

After all, isn't that how all super-rich bluebloods should be addressed?

These people have the best racket in town. And the funny thing is, we LOVE them for it.

I took my son last night, as a reward for being so well-behaved and performing exemplary with his choir at our local children's museum.

I'd tell you that the place gave my sticker shock, but I'm not so shocked anymore.
We've been going there for over 10 years - heck, I even went there as a child with my aunt and cousins. Back then, though, it was called Showbiz Pizza, and the star of the show was a purple gorilla, not a mouse.

And there weren't security guards patrolling the place, but I digress.

I went to the counter, ordered my "small" pizza and the obligatory tokens. I opted for the "deal" where I saved $6.25 because they gave me 29 bonus tokens for buying 80 tokens all at one time.

So I paid $20 for this little cup full of jingly coins. And just to be sure you don't use that cup at the over-priced soda dispenser, they drilled little holes in the bottom.

Classy.

Did I mention a bottle of water was nearly $2? Seriously.

But like I said, we love it. Because there's nothing else quite like it. Our kids love it, and because of that we're willing to pay for it.... and PAY for it.

The idea behind tokens is clever. You're trading value, so you don't really think about how much money you're actually pouring into the machines at this place. The token machines even take credit cards these days.

Ahh, the age of convenience!

So you put a token in, and a little over half of the games will spit out at least one ticket in return. The other half of the games are entertainment rides, pinball machines, or video games - that will take longer to "eat" your token if you've got some skill.

But the attractive nuisances are the games of chance that loom in nearly every corner of the place. The ones where you can drop in a token for a chance to win 50-250 extra tickets.

And the odds of winning the extra tickets are slim. Very slim.

I remember when Skee-ball paid out tickets for every 40 or 50 points you earned. Now, until you hit 450 points, you're lucky if you get 3 or 4 tickets when you play.

And when you go to cash in those tickets, they are only worth about a penny a piece.

Did you just see what happened?

They traded your value down. WAAAAY down. And our kids jump up and down and celebrate!

Because in trading down value, they offer a little bit of entertainment along the way.

And I even tried to just give my kid $20 to go to the "prize" table and pick out some stuff, but he wanted to play "like the other kids".

So my $20 turned into about 270 tickets - or about $2.70.

Plus a little "entertainment" on the side.

But gone are the days of the big stage shows with the anima-tronic characters, or even the big TV's with videos for the kids to watch while they wait for pizza. So the adult entertainment value has REALLY dwindled.

So your marketing lesson? Well, it's two fold today. First, if you can find a way to convert value like Chuck, you're in luck. Creating a perceived value that's higher than your actual cost is what creating a profit is all about, but in this case, not only are you making a profit, you're virtually gouging your clients AND they're saying "thanks, we had a great time, see you soon!"

And before I get cards and letters, I know that there are overhead expenses for a place like that, but I also know that if they're SELLING those prizes, there's already a mark up on them, so to reduce the value even further with tickets only validates my point.

The second lesson is that if you can go the OTHER way and provide even MORE value for your clients, you'll reap an even greater reward. Chuck did this after months of customer complaints regarding the "price" of the games. Now, all single player games only "cost" one token. And they advertise the heck out of that value. So your "money" goes even farther now at Chuck E. Cheese's....

Where a kid can be a kid, and a parent can be broke by the time the pizza arrives at the table.