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Dynamic Pricing

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Dynamic pricing -- pricing that changes according to availability -- was highlighted in a "Denver Post" article, as many Colorado arts organizations are using it:


Rick Lester, who changed all the pricing rules in 1995 when he founded an influential arts consulting group called Target Resource Group in Colorado Springs. TRG has been preaching the gospel of dynamic pricing ever since to a client base that has grown to more than 1,000 nonprofit arts organizations in North America and Australia — including nearly 50 in Colorado.

According to the article, Lester's first client was Pacific Northwest Ballet:

Their first try at dynamic pricing generated an additional $1,500 in ticket revenue. "They were thrilled, but I was suicidal," said Lester. The second campaign netted an extra $77,000, and the third $500,000.

The odd thing here is that for almost every program in the last 10-12 years, I've bought seats to multiple performances of the same program. I have been aware of discounts over single ticket prices for subscribing, the 20% subscriber discount for single ticket purchases, higher "Nutcracker" pricing for peak performances, and various last-minute discounts applied to base ticket prices, but maybe because I try to sit in different sections and buy most single tickets long enough ahead of time, I've never been aware of dynamic pricing, which makes sense for "Nutcracker", "Swan Lake", "Sleeping Beauty", now "Giselle", and perhaps unannounced discounts but discounted pricing close to the less-popular triple bills.

I could see the potential danger expressed here:

But not every arts group is all aboard the pricing train. "I think it's a great way to lose customers and potential donors," said the Colorado Music Festival's Brandi Numedahl. "The short-term bump in ticket revenue does not make up for the long-term damaging effects it can have."

I wonder if this is more detrimental for an arts festival than for an organization that performs much of the year. Subscriptions, which guarantee numbers and provide early cash flow, are trending down, with people making decisions closer to events. The truism is that subscribers are more likely to be donors than single-ticket buyers, and at PNB there's a mandatory donation for premium seats. I'm not sure if subscribers, who generally get a discount on the seat price, often discounts to local restaurants, discounts to the gift shops, and first dibs on gala tickets, and who get to keep their seats, think that much about the per-ticket price months later, or are likely to go to the website to see what people around them are paying.

I do know I'm much more aware about advertised discounts than unannounced changes in pricing that would come up on the website.

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ABT has had an announcement this year and in 2011 (and perhaps in earlier years) that prices might go up for certain performances in mid-April depending on demand for the Met season in 2012. That's a couple of weeks after single tickets go on sale and long after subscriptions have been available. I have no idea how much they bumped up prices or for which performances in 2011 and I'm curious if anybody knows.

The Denver Post story is interesting. They mention heavy demand for Lion King and much higher prices for remaining seats. My sister tried a few weeks ago to get tickets for a family group and was appalled at the high prices for what she considered lousy seats and decided to skip it. I suppose those seats will eventually sell. For West Side Story, though, we got great seats a few weeks ago at what seemed very reasonable prices, but perhaps we got in early enough for good prices.

As an aside, they mention bumping up parking fees $3 at the Denver Center right before performances. But I was astonished during the Great American Beer Festival a block away at the Convention Center that the outdoor lots bumped up their normal $10/day price to $25/day! And all tickets for the Beer Festival sold out in August, two months before the event. Tells you where the public's priorities are!

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It's a crap shoot. There is no informaiton ahead of time regarding which perforamnces will have price increases, and the amount of the price increase. All you know in advance is the general warning that "ticket prices are subject to change." Interestingly, for a performance at ABT, they raised the balcony price (because the balcony, which is small and relatively cheap, was heavily sold) but the price for the orchestra did not increase (the orchestra is huge, and expensive, so tickets in that section didn't sell well enough to be subject to a dynamic price increase). I'm not sure whether, in the big picture, ABT gains much by doing this. I paid the price increase for one perofrmance, but for another one I decided to pass because it was not worth it to me to spend the additional sum. I resented the price increase enough to walk away. (The performance I added on was to see Johan Kobborg perform Giselle w. Dvorovenko, which was on a Saturday matinee.)

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