off-stage right

There has been a lot of discussion about demand-based or variable-price ticketing and the arts (including this recent article in Palm Beach Live about nonprofit performing arts groups in Florida experimenting with it and Ken Davenport discussing demand pricing on Broadway).  The arts have been playing with the idea and implementing in many ways for years – extensions commonly include a price increase, evening weekend performances have long cost more.  I am a big proponent of implementing it on a performance by performance basis.  I think widespread use similar to the airline industry would be a huge benefit to the bottom line for the performing arts, both commercial and non-profit, as well as increasing capacity.

However I have two concerns regarding implementation.

First,  not surprisingly, we have figured out the premium ticket pricing for those who wait for the last minute of a hit show, but are we offering low enough prices for early purchases?  I have written about this before, are we doing enough for early adopters?  For example, I know if I buy a ticket from New York to Detroit at least two months in advance I can get a round-trip ticket for around $100.  If I buy same ticket between 21 to 30 days prior to the flight it will easily cost double that amount.  If I get outside the 14 day window it might be $250.  At the very last minute it might be back around $200 or just under, but it will never again be the super low price that I would have paid for planning in advance.

Some would argue that the high-end is where we need to focus and certainly that is what most commercial productions and those who are exploring it in nonprofits have spent energy.  But can you have one without the other?  Is the unused inventory as important to address and making profit when a show is a hit.  Since there are more non-hits than hits, I think it has to be looked at equally.

Performing arts subscriptions usually don’t represent that steep of a discount early on and include multiple shows.  The commercial shows are a bit better in early bird discounts, but still not at the magnitude of industries that use this type of pricing consistently.  As a matter of fact we save the steepest discounts for the very last minute buyers, usually day of or rush tickets.

But what about previews?  Of course there are discounts for previews often quite good discounts but again these are based on show schedule not time of purchase.  It can be argued that the airline industry restricts the most often purchased flights from any significant discounts no matter when you buy, but they offer many more options than the performing arts, so we have to make our variable pricing incentive enough to keep an audience member form other forms of entertainment.  There are a few select membership programs, TDF for example, that offer tremendous discounts to their constituents, but these are not widespread to the general public.

I have seen companies do one or two day sales when ticket first go on sale – usually when little information about a production is known and we are counting on people having faith in the institution (something we should seriously be assessing – see this post on consumer trends and this one on trust issues).  The commercial sector has a huge advantage in this scenario as the tickets don’t go on usually before you have that information.  The production of Hamlet coming to Broadway this fall was one of the first to offer advance sale $25 tickets to the public from the moment single tickets went on sale.  It will be interesting to see how it plays out for the production, but also to see if it adopted for other productions with less known titles and lead actors.

One could point to Signature Theatre Company in New York ticket initiative, which offers a significant savings to the audiences through their $20 ticket initiative, but the program isn’t a true variable price program.  However it is important to understand the initiative for this discussion.   PLEASE be clear is not a discount but an underwritten ticket.  This is vital to understand because without the corporate, foundation, and individual support that is underwriting the tickets Signature would not be able to make up for lost earned revenue they previously had from a strong and loyal subscriber base. (Cheer to Time Warner, Mellon, Ford and all other long time supporter of the program). Through the underwritten program, Signature sells out within hours of putting a show on sale and has diversified their audience AND when a show extends the customer who wasn’t quick enough to get an underwritten ticket has to pay $65 for a ticket.

This program which I am proud to have been a part of implementing and developing is an amazing feat for a relatively small although visionary company to pull off.  If all businesses, foundations, and other entities would see the tremendous value and implement the program nationwide we would solve the entire price point issue at least for the nonprofit performing arts sector.  I encourage everyone to pursue this, but since it is rather unlikely that it can be achieved in sweeping fashion, I think organizations who are taking matters into their own hands and exploring variable pricing need to learn from it.

The extreme reduction in price, for certain seats purchased far in advance can and could be achieved within the subscription model if subscriptions still offered some sort of “perks,”  for example keeping seat locations which is often key to long-time and older patrons.  Or seat location and day and time of performance could play into reduction offers.

So the if the first issue is whether ticket prices are low enough early on in variable pricing and the corollary issue of whether there is enough difference in price points based on the demand.

This companion post from April offers a few more ideas on this while discussing reversing last minute buying trends.

The next concern I have about demand pricing is about our technology being able to keep up with scaling the house.  This is probably a much larger concern in the non-profit arena, but is key to implementation.  As more and more transactions are done on the internet it is vital for us to demand that ticket software vendors keep up.  As most still can’t handle membership programs without several odd steps, I think the concern is well warranted.  It also won’t be beneficial to the bottom-line if there are only one or two services who can handle the process so additional income is eaten up by fees and surcharges.

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