Ask Me Anything Question
We discount tickets for young patrons, military, teachers, and students. Are there other ways that arts organizations are successfully price discriminating to capture more value from cohorts with higher willingness to pay? Or when is price discrimination just discrimination?
Timmy Metzner’s Answer
Price discrimination is a pricing strategy that charges customers different prices for the same product or service. Almost every arts organizations uses this strategy to allow access to groups seen as elastic (sensitive to price) while maximizing income from those that are inelastic (ambivalent to price).
However, your questions are important ones. Is the perception of price elasticity of social cohorts (student, youth, senior, etc.) a valid one, or is it an assumption? Furthermore, are there individuals within those cohorts who are inelastic and thus, are you leaving money on the table?
We at JCA Arts Marketing are not inclined to make decisions based on assumptions, so we feel the best way to determine if your price discrimination strategies are effective is to research the behaviors of your patrons. Find out how your patrons prefer to buy regardless of social attribute and then place them into cohorts based on similar purchasing behavior.
If you are able to track patrons who only purchase with a discount code, or in a certain area of the house, or below a certain dollar amount, those patrons are most likely your price elastic patrons. You want to ensure they’re being given access to prices that meet their budget. Conversely, patrons who consistently buy full price, higher priced or premium area tickets shouldn’t receive messaging about discounts or cheaper tickets.
We are not advocating for anyone to abandon current practices, but rather to use data to better understand patron behavior and ensure that your pricing strategies work to meet price elastic patrons’ needs while also maximizing income from the inelastic. Providing access to multiple cohorts is paramount to ensuring you have a diverse and full audience.
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.