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Why Re-Scaling Your Auditorium Is the Secret to Successful Pricing

CBSO in Birmingham's Symphony Hall. How important is re-scaling your auditorium?

This is a guest post for Spektrix by Debbie Richards, Director of Baker Richards

Motivations for attending the arts are varied – from special occasions to a desire to see a specific performance or a social opportunity to catch up with friends. This has major implications for pricing strategy. Perceptions of value are not simply determined by a customer’s life-stage, lifestyle, disposable income or frequency of attendance (although these factors do play a role). Crucially, the same person can have different motivations on different occasions. This means that perceptions of value are almost unique to each customer for each performance. In turn, this affects each person’s willingness to pay.

The secret of an effective pricing strategy is being able to offer a range of different prices to match those different perceptions of value and willingness to pay. If you only have one price then you lose money in two ways. Firstly, there will be people who would be happy to pay a higher price, representing lost income as you charge them less than they are willing to pay. Secondly, there may be people who would only be willing to attend at a lower price than the one on offer, meaning lost ticket sales and thus lost income. The key to success is working out:

  • the price range you should have, from top to bottom
  • the number of prices you should have within that
  • the number of tickets available at each price

You then need to fit all of this alongside your wider earned income strategy (for example, how does this work with membership sales?) and your discounting strategy (including both promotional discounts such as subscriptions, season passes, multi-buys and your concessions or social discounting policy).

There are plenty of ways to vary price, including charging different prices according to time of booking, sales channel, party size, date or time of performance and much more. However, one of the most common differentiators in the performing arts is to charge different prices according to the respective qualities of different seats. The different aspects of a seat that contribute to its quality include:

  • Area (stalls, circle, balcony, etc)
  • Proximity to the stage
  • Centrality of view
  • View restriction
  • Acoustics
  • Surtitle view
  • Seat type (separate seat with arms versus bench versus standing)
  • Aisle proximity
  • Leg room, comfort and convenience (i.e. ease of exit and access to bar)
  • as well as particular value attached to the seats perceived as being the “best” seats.

This list of attributes is crucial because each difference in price must be reflected in a difference in value: real or perceived. So when ‘scaling’ an auditorium (the term for setting the outline of different seating areas and the prices of each) it’s vital to base this on differences in the value of the seats that will be understood by audiences. Indeed, the key is to let your customers tell you what the best seats are. This is because a customer’s subjective perception of value is often at odds with the ‘objective’ view of an expert. For example, where a customer will choose to sit is not necessarily the same as where an Artistic Director would choose to seat a member of the press.

This understanding is created by analysing demand in great detail - down to the level of specific seats. Which seats are sat in most often? Which seats sell fastest and at the highest value? Crucially, which different customer segments choose which different seat locations at different prices? The success of this strategy will also depend on how much difference in value customers perceive. This can be substantial in some contexts, where there is perceived to be wide variation in the value on offer, and minimal in others.

Some organisations claim that their auditorium is too small to offer differentiated prices. In many cases that is true, because there is insufficient difference in the perceived value of different seats to justify different prices. In this instance an alternative approach to charging different prices, such as time of booking, might be adopted. However, we would point out that, even in the smallest auditorium, if you offered general admittance there is always a seat that will get chosen first and one that will be chosen last.

CBSO perform on Birmingham's Symphony Hall stage.

When the City of Birmingham Symphony Orchestra (CBSO) first moved into the new Symphony Hall in Birmingham they priced what is a very complex auditorium in a very logical way. However, as the first few seasons were completed their analysis showed that their ticket yield (the amount of income they were realising on average for each seat) was declining. This was because customers were ‘learning’ the auditorium and establishing their own seat preferences, often in locations that had been set at lower prices. Baker Richards assisted the CBSO in understanding how their customers perceived the value of different seat locations and re-adjusted the scaling accordingly. This change in strategy meant that while prices were increased by 9%, actual income increased by 12% by focusing the changes in price on the seats that customers most wanted to sit in.

Every time you make changes to pricing, it affects patterns of demand. For this reason, it’s essential to keep your scaling under review (even the most successful organisation can continue to find ‘tweaks’ to optimise attendance and income in response to changing demand). However, re-scaling the house is rarely a solution in isolation – it’s just one tactical element in helping you to optimise attendances and income. An effective pricing strategy must review and respond to your organisation’s objectives (artistic and social, as well as financial) and align with your communications strategy.

An example of the impact that can be achieved includes a producing theatre in Sweden where we increased ticket sales by 9% and income by 40% (on the same number of performances) through changes to their pricing strategy including re-scaling. At The MAC in Belfast we made adjustments to the pricing strategy including dynamic pricing where we achieved a 51% increase in gross income.

So get your pricing strategy and scaling right and you too will see an immediate impact on your bottom line.

For more information, go to www.baker-richards.com