Pricing Strategies to Attract Audiences and Keep Them Coming Back for More
Seems simple, doesn’t it? If only we could just make very inexpensive tickets widely available, we’d fill our halls every night, right? Wrong. Very few performance venues make a long-term success of low-price presenting without (and sometimes even with) underwriting.
So how do the rest of us set prices that attract audiences and satisfy patrons? Without exception, people value what we do differently. Some will gladly pay top dollar for an experience they want, others have limits (for whatever reason) to what they think is reasonable. These values, unless we’ve done a thorough job of demand analysis and differentiated pricing, often have little relationship to how we price our tickets. Too often, we base our prices on what we charged last year (and the year before, and the year before).
One recent client, in a hall seating more than 1,000, had two ticket prices: $53 and $57. This pricing cuts both potential buyers and revenue out of the picture. Many will value performances at prices in the $20, $30, or $40 range, and will not buy. Others, who would be willing to pay considerably more, get a great bargain or are left holding their money in hand after tickets sell out. All but the few are unhappy, unsatisfied, or unserved. Offering a much (in this instance MUCH) wider range of prices allows new audiences and bargain seekers with an entry point, allows mid-range buyers a choice of seats, and reserves (much) higher priced tickets for those who highly value a premium experience.
But can we not leave our prices where they are and attract audiences with discounting? The Arts Council England has said, “Experiments with pricing have succeeded in attracting new audiences. The National Theatre’s Travelex scheme [a deeply discounted ticketing plan rolled out at theaters across the country] and the Society of London Theatre’s Kids Week and Get Into London Theatre campaigns grow each year.” A consultant’s report continues, “The Royal National Theatre’s Travelex season, offering tickets at £10, has received enormous press attention, proving a tremendous public relations success, as well as a financial and popular hit... The proportion of first-time bookers ranged from 20% of the audience for ‘Tales from the Vienna Woods’ to 33% for ‘Henry V’.”
Sound OK? That depends on what you aim for as a success. If we assume that it does represent a gain in new audiences from previous seasons, we still have no way of knowing how many, if any, of these patrons returned in subsequent seasons. If our aim is, as I believe it should be, to build a base of returning patrons, then why do we assume (against all evidence) that more than a tiny handful of people induced to attend at $10 will ever return at $53? And, as importantly, deeply discounted tickets place an extreme strain revenues. Fortunately, Travelex underwrites that English program. Agnes Varis underwrote Metropolitan Opera’s $25 Rush ticket program to the tune of $2.5 million in 2010. Do you have an Agnes Varis? (Sadly, neither does the Met any more; Mrs. Varis died August 5, 2011.)
Particularly addressing this question as it pertains to young audiences, Chad Bauman (Director of Communications at Arena Stage in Washington, DC) recently wrote in his blog post “The Truth About Attracting Younger Audiences:”
“In the past few weeks, I have served on a couple of panels and delivered a few speeches about attracting younger audiences. In doing so I found that many people harbor some misconceptions about attracting younger audiences... Price. News Flash -- many younger audience members have money, and are not as price sensitive as some of us assume. Consider this study that reports that the 37 million young adults from 25 to 34 years of age in the U.S. have an aggregate income of more than $1.1 trillion. In an attempt to explain the absences of young people, I think we have jumped to price as the primary issue because it is much easier to change than product. However, I would argue that those who have to adjust tickets to bargain basement prices to attract younger audiences primarily have a problem with the product. Consider that in 2008, Ticketmaster reported that the average price for a ticket to a Coldplay concert was $217. For those lucky enough to have seen Coldplay, you know their events are filled with Gen X'ers.”
Making some tickets available at permanently lower prices can build an audience that returns to buy, and will be a useful tool if price and inventory are managed well. And differentiated pricing throughout the hall gives patrons the option of choosing a price that’s comfortable for them.
And at the upper end of the scale? Pricing can work to build audiences here, too. Especially for popular performances, high ticket prices can make sure that those patrons who value our offerings highly have good tickets available. Dynamic pricing, by pushing ticket prices higher as performances dates approach, can have a strong effect on pushing knowledgeable buyers to earlier purchase decisions (to avoid the coming jump in prices) and cement subscribers’ loyalty (again, to avoid the jump). This isn’t just presumption, by the way. Many theaters, including Arena Stage, have proven this in recent years.
Higher ticket prices and dynamic pricing can also ensure that our (very expensive and time consuming) advertising and promotions include availability to our most attractive programming, rather than continuously advertising that our best seats and most popular performances are permanently sold out. When we occasionally display SOLD OUT, it may serve as testimony to the excellence and popularity of our offerings. When we indulge in it frequently, it teaches the public that we are not for them but for insiders.
When tickets won’t sell at any price, it may be the responsibility of the marketing department to remind our colleagues that an unattractive product is the reason why. But when we have a product that can sell, it is our responsibility to balance volume and revenue by making tickets available at broadly differentiated prices, cutting deep discounting out of our plans, and implementing dynamic pricing that prevents our most attractive programs from selling out early. When patrons are offered reasonably attractive programs that meet their valuation at differentiated prices and allow them to purchase what meets their needs, we build audience that is sustainable and repeatable. There is no magic bullet.
For more on this topic, register for my webinar with Americans for the Arts, Pricing Strategies to Attract Audiences and Keep Them Coming Back for More, October 19, 2011, 2:00-3:00 p.m. This webinar is FREE to members of Americans for the Arts, and now available for $35.00 to non-members. Terms and conditions apply.