In our world of performing arts, pricing is always at the center of the conversation. You only need a quick search on social media to see that the discussion around price is also an emotional one.
Compounding that, each of us is having varied and personal experiences with the cost of living rising. Arts professionals, it may be said, tend to have a strong tether to “the why” in their profession. We all want to be sure that all who wish can access the arts. Your organization, as all others, exists along the constant tension line between the need for revenue and the desire for accessibility. This blog will explore some new ways to relieve the anxiety around pricing and find ways to build access and revenue together.
Economic downturns are complex and impact different people in different markets… differently. The factors at play in the macroeconomic picture are well outside the control of the arts sector, yet we frequently see the industry focus turn to ticket pricing. IMPACTS research indicates that high propensity arts visitors are intending to spend less in support of their cultural experiences, but admissions price is not a leading cost barrier in that decision. In fact, the data shows that high propensity arts visitors are not deferring their cultural experiences altogether by simply not buying tickets, rather they are looking to spend less on expenses around their attendance like parking, childcare, on and offsite food and beverage purchases, and travel costs. Lowering your admissions prices by a few dollars will have little to no impact on your customers budget compared to the other ways they will choose to save, but it will be felt at your organization, and perhaps limit your ability to deliver on your mission and offer effective access programs.
In good times and bad, arts organizations have long offered ways to save on the experience of seeing live performances: early booking, subscription and multi-buy packages, membership/donor benefits, youth and senior discounts too. Our sector has already implemented every possible way to make it easier for people to attend, but still, we don’t see as many people in our seats as we want or expect. This is because price does not drive demand, but rather demand drives price. In other words, discounting will not achieve the objective of increasing the volume of ticket sales. The UK Performing Arts Survey for October 2022 asked audiences across 38 UK venues why they have not visited a venue in the last 12 months and found that while price resistance was uneven, it impacted demand far less than might be expected anecdotally in challenging economic conditions. In the survey only 13% of audience respondents cited price as a reason for not yet returning to arts venues.
Figures taken from 92 responses in The UK Performing Arts Survey Oct 2022
Despite uncertainty about 2023, advance ticket buying is strong, and there’s data supporting that large volumes of buyers are willing to spend a little more in 2023 than they have recently. Organizations in TRG’s client base are reaching some of the highest prices they have ever offered by successfully implementing dynamic pricing for the first time. Pitlochry Festival Theatre achieved the highest average ticket price in their 75-year history, increasing the average price paid by 19% since 2019 and beating their financial target for the show by more than 50%. Just the dynamic pricing increments on their show, Sunshine on Leith, made up 8% of the show’s total ticket revenue. Another TRG client, New Wolsey Theatre put their spring 2023 season on sale in early November and after seven weeks it is already their best-selling season ever. Customers are willing to pay for the value of something they want to see, but before price is even a factor they must know about your offering and be interested enough to check the price. Building demand for your product is the most important factor to consider, long before price.
So, price is not the thing to focus on right now, fine, but you still must set one, right? Pricing analysis is not simple work because it’s a moving target. It starts with measuring demand and understanding how your prices compare and compete with others in your market. The truth is, there is no optimal price, because demand is not static, and neither should your pricing be. A one-price house sounds fair and accessible, but that one price would still be too high for some, and less than what others would happily pay. This creates revenue challenges for organizations without really solving the issue at hand for those who are most price sensitive. While media attention on extortionary prices in commercial entertainment and wider concerns about a recession are not helping, in other periods of economic turbulence the data points to demand as the culprit for slumping ticket sales. The good news is that your organization can do something about demand, and building access is a key piece of it. By incorporating a pricing strategy that creates new low-price inventory, often 20-30% lower than the previous price, with strategic pricing gaps that push the top end of the scale much higher, venues can increase their gross potential and average ticket price while also lowering prices on many seats in their venue. This is the balance that we must strike – price access AND maximizing yield on in-demand seats, it’s all about creating choice for customers that lets THEM, not us, decide the intersection of price and demand.
Revenue is not in the way of your mission, or your “why”, it’s a requirement to achieve it. Without very intentional pricing that is based on demand, any attempt to build access will result in leaving money on the table that patrons would have been willing to pay, while doing very little to truly build access for those who need it. Arts administrators have one very important challenge when discussing price, leading the conversation away from emotion. Data is the way to do this, when someone says “too expensive” you need to look at data to see if that’s the case. Even though the UK is fortunate to have access to more public funding than North America who leans on private philanthropic giving, both business models are heavily reliant on ticket sales, meaning pricing is something we all must get right. TRG Arts is here to help if your organization needs an outside partner to help guide pricing conversations.