Ah, Dynamic Pricing. The holy grail of entertainment earned revenue. Has worked for the airlines for YEARS. And yet we are still deeply afraid of it.
What am I talking about? Assumptions number 3, 4, and 5.
Let’s throw out the notion that two people sitting next to each other in the theater have any notion whatsoever what the other person paid for their ticket.
You might believe that, because you have posted your prices on a postcard or a brochure, that your audience has developed a reasonable expectation of paying the same price as their neighbor.
But here’s what’s true- They will often expect to have the opportunity to select a seat at the lowest advertised price. They want to have the lowest advertised price AVAILABLE to them. But most of the time they don’t actually choose a ticket at that price point. And they hardly ever look at the top bracket price. Nor do they call and say “Can you please sell me your most expensive ticket?” So why do you tell them what it is in advance?
Instead, take a stab at dynamic pricing- a model being strenuously and successfully promoted by Target Resource Group, among other consulting groups. Under this model, you advertise your lowest regular adult price, with the phrase “Starts at $XX.” Then you make sure the lowest advertised price requires them to buy early, come to the least popular performance night and sit in the very visible but not very good seats right up front on the side.
If they want a better night, a better seat, or the chance to wait until the last minute, it will cost them more. And if you haven’t advertised your additional prices in advance, you can adjust these numbers on the fly, experimenting until you find the right price breaks for this audience for this particular show.
Choose an audience you want to be “accessible” to, and make them an offer they can’t refuse if they buy their tickets early. This helps get your houses looking full early in the game.
“But,” you say, “If I sell a bunch of tickets at a deep discount early on, aren’t I leaving money on the table? Wouldn’t some of those people have paid more?”
Possibly, yes. But as we discussed in Filthy Lucre #3: Through the Looking Glass you’ve just rewarded the people who are willing to commit early- before reviews, before rumors of sellouts, and most DEFINITELY before closing weekend. This is a pretty self-selecting bunch of deal hunters. So don’t worry about that.
How you’ll make your money is on the next round of patrons. The ones who call once a show starts to get good buzz or get full. Because you’ll set target dates and agree as a company that once an individual performance has sold a certain percentage of the house (say, 70%), you’ll raise the price $5 for the remaining tickets to that performance. When it hits 80% full, you’ll raise it again. And so on. (Have an average ticket price that’s closer to $10? Raise it $1 every time you get 10% closer to sold out. You’ll be shocked how quickly those dollars add up).
And that perpetually sold out closing weekend full of people who waited till the last minute? That becomes your most profitable weekend. The people who complain? They get told that the earlier they buy the cheaper their tickets would be. The next show, some of them won’t wait.
This can’t possibly work, your box office staff may tell you. People will KNOW that they are paying a different price today than they paid yesterday. They will COMPLAIN. They will REFUSE TO BUY.
Here’s the thing though. If you only raise prices on shows that are filling up quickly, you will discover that those people just want to see the show, and largely don’t care what it will cost to see the show on that night. If they DO care, you can always direct them to a night that is not selling as well, and is therefore cheaper.
As counter-intuitive as it sounds, nobody loses by this equation. The people anxious to get in to a nearly sold out performance feel lucky to get in, not stiffed on the price.
And the shows that don’t sell as fast start looking like a better and better deal.
The end result? Your hits can work harder for you, all without the expense of adding performances.
Yeah, but does it WORK?
Well, I was introduced to the idea by TRG at a Theater Bay Area conference. They cited examples from major ballets and symphony orchestras across the country, all of whom had seen major earned revenue increase with no additional cost. I was intrigued, but skeptical.
I brought it back for discussion at my current theater and our Marketing Director, who had also heard the concept, was game to try it. We omitted the price lists from our website. We worked with our IT staff to figure out how to build in stepped price increases into our ticketing system that could be activated when capacity hit certain key markers.
We crossed our fingers, squeezed our eyes shut tight, covered our ears and pulled the switch.
And to our amazement, our earned revenue and average ticket prices started to steadily climb, even as we were able to continue offering aggressive discounts to special groups and Facebook fans to reach our new audience and accessibility goals.
All with nary a peep of complaint from our patrons. Even the ones, who in some cases, paid as much as $15 more per ticket than the original price for their performances.
So yeah. It worked for us. When will you start making it work for you?
Latest posts by Trisha Mead (see all)
- #stealthisidea: Vending Machine Dances, Musicals in the Wild and Blues at the Bank - 20 July 2012
- Steal This Idea: Your Next Transmedia Brochure - 23 February 2012
- Steal This Idea: The Only Winter Theater Pitch You’ll Ever Need - 19 January 2012