Baker Richards
An effective pricing strategy can help an organisation to increase income, maximise ticket sales and promote accessibility. A really sophisticated strategy achieves all three of these aims at once. Optimising decisions on the tiniest details can add up to significant marginal gains and those gains are multiplied through the flexibility offered by revenue management and dynamic pricing, delivering a measurable return on investment and additional income which goes straight to the bottom line.
Working with Baker Richards, Newcastle Theatre Royal added £122,000 to the income from its pantomime in 2010/11. Without increasing prices, and with only a 1% increase in ticket sales, gross income was increased by 11% as a result of subtle adjustments to price scaling and scheduling. Similar results have also been achieved for Aberdeen Performing Arts, the Marlowe Theatre in Canterbury and Hackney Empire, among others.
Birmingham Hippodrome increased income by £92,000 by controlling discounting more effectively, part of a raft of pricing adjustments that generated £460,000 in one year. Elsewhere strategic approaches to discounting are being used to stimulate greater attendance by young people, such as The Old Vic’s Aditya Mittal tickets for under 25s.
COME FLY WITH ME
Sometimes a more radical approach is required and Baker Richards worked with Kings Place, in London, to design a unique new ‘hybrid’ revenue management strategy using the same principles as airlines to maximise attendance for a wide range of music events.
Dynamic pricing (changing the face value of a seat over time in response to demand) is becoming ubiquitous in North America, and Stratford Shakespeare Festival in Canada has been using dynamic pricing for several years to increase prices after the initial sales period. More recently the festival has been working with The Pricing Institute to develop enhanced forecasting and monitoring so that price changes can be applied earlier to more tickets, thereby maximising income.
IT DOESN’T HAVE TO BE MAMMOTH
The Pricing Institute has helped smaller organisations, including Geffen Playhouse in Los Angeles and a multi-artform presenter in San Francisco, which made $150,000 in additional revenue thanks to re-pricing, house scaling, and new dynamic pricing tactics. But in each of these cases, the application of revenue management and dynamic pricing tactics is about much more than simply increasing prices.
Woolly Mammoth is a mid-size theatre company based in Washington DC, presenting new writing with something challenging to say, using fresh approaches to acting, directing and design.
Woolly’s current season opened with a highly successful run of ‘In the Next Room – or the vibrator play’. The Pricing Institute helped Woolly introduce more innovative approaches to pricing and an integrated new approach to revenue management, incorporating dynamic price increases, greater variability in price scheduling, and strategic discounting to maximise income when opportunities presented themselves...
Variable pricing and discounting were used in tandem to drive demand into less popular performances while prices were increased for peak performances once word of mouth had started yielding higher sales, including during a two week run extension.
Increases in prices alone yielded an additional $6,000 for this single production, but the biggest impact was in creating greater courage and confidence throughout the organisation, from the Board down, to create a more robust approach to pricing for future productions.
Free pricing resources and case studies are published at www.thinkaboutpricing.com. There is also a Thinkaboutpricing group on LinkedIn, with international discussions about hot pricing topics.
The Revenue Management Application
The Revenue Management Application (RMA) is the first software application designed specifically to provide a detailed evidence base for pricing strategy, as well as tools for monitoring and evaluating pricing in cultural organisations.
Developed in association with The Pricing Institute and Jacobson Consulting Applications, Inc., the RMA takes Baker Richards’s proprietary analysis techniques, developed over nearly ten years of revenue optimisation consulting, and makes them available on your desktop to help identify opportunities for increased yield and planning a more effective pricing strategy.
The RMA is based on a series of pre-built reports that can be filtered to show the most relevant combinations of ‘matured’ or future performances, displaying proprietary metrics for analysing price demand, including the Hotseat Index™ used by Baker Richards and The Pricing Institute. The RMA is currently available to Tessitura users only.
For more information please visit www.thepricinginstitute.com
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