Ask Me Anything: Differentiated Pricing
Ask Me Anything Question
“I’m getting pressure from the board to bring in more ticket revenue. All our seats are the same price because there really isn’t a bad seat in the house, so what if I lowered the ‘worst’ and increased the ‘best,’ would that help or would everyone just buy the cheaper seats and we’d be worse off?"
Timmy Metzner's Answer
What you’re talking about is “differentiated pricing.” This is the term used to describe different prices for different seats or performances. Your concerns are common, but, thankfully, unfounded. When you say all your seats are great, you’re assuming your audience perceives the art the same way you do. And, when you say everyone will just buy the lowest-priced seats, you’re assuming your audiences, on a whole, under value the art your organization produces.
Stop right now and remove your bias—it’s the biggest hurdle to pricing correctly.
Let me give you an example of why differentiated pricing is so successful. Let’s say you have a performance coming up and you’re going to offer tickets for $20. You figure you’ll sell 400 of them and that sounds great. You’ll make $8,000. But there might be some people for whom $20 is too much. What if you put some tickets on sale at $15? You might sell another 50, bringing your total gross to $8,750. But, also, there are some super fans who are more than happy to pay $30 to sit very close or have access to an added benefit like a signed program. If 50 of those original 400 people paid the premium price, your income would grow to $9,250. So, by just adding differentiated pricing, you’ve increased your gross by $1,250. Its supply and demand; simple Economics 101.
Do you have a question for the team at JCA Arts Marketing? Submit it here. It could be featured in an upcoming Ask Me Anything post.
JCA Arts Marketing collaborates with cultural organizations to increase revenue, boost attendance and membership, and grow patron loyalty. We provide consulting and software services to hundreds of cultural institutions across multiple genres, including dance, museums, opera, performing arts centers, symphony, and theatre. We can help you achieve your marketing goals.
Timmy Metzner, Senior Consultant
Subscribe to our Ask Me Anything series