Are you afraid that your audience will reject dynamic pricing? You have the power to support your customers and help them embrace it.
'Dynamic pricing' — or 'demand-based pricing'— is nothing new to the arts sector. As an industry, prices have always been set based on predicted demand for tickets, whether based on the popularity of the show or the popularity of the performance date/time. For example, it’s common that popular shows on a Friday or Saturday night will be priced higher than a midweek matinee of the same show.
The arts sector has an ongoing struggle with devaluing our 'product'. Often, marketing and sales teams lose their nerve and do last-minute discounting to fill an auditorium. This practice can have a negative impact on the perceived quality of the show (people like to buy what appears to be popular with others). It can also sway your audience’s booking habits, as they hold out later and later for a last-minute discount.
Remember, dynamic pricing is not a race to exorbitant ticket prices. For low-demand shows, prices are as likely to decrease as they are to increase for high-demand shows. In fact, there are many benefits of dynamic pricing for your organisation and your audience alike.
So, let’s take a look at some common fears around audience reactions to dynamic pricing and unpack how to address them.
Fear #1: 'Dynamic pricing can make people think of airline-style pricing'
We’ve all had our frustrations when trying to buy an airline ticket. The process can be obtuse, with multiple add-ons throughout the booking journey, leaving you feeling like you’ve overpaid or been cheated by the airline.
If this is your only touchpoint with demand-based pricing, it’s understandable to be wary of bringing that experience to your organisation. After all, in the arts, we have uniquely strong relationships with our customers and we would never want to trick or string them along.
Fortunately, dynamic pricing for events is much more straightforward. There are no such hidden charges. In fact, your approach to dynamic pricing should include proactive and transparent communication with your audience about what they can expect. You can earn their trust and help them feel assured that they’re getting a fair price.
Plus, keep in mind that with demand-based pricing in the arts, the vast majority of patrons won't even realise there have been pricing changes over time. Most audiences make a judgment on how much they want to spend based on the seats and prices available at the time of booking – they are unlikely to memorise the associated prices for each seat in the seating plan, then return at a later date ready to spot a small difference.
With a mindful communications strategy in place, your organisation can absolutely access the advantages of dynamic pricing without friction for your customers.
Remedy: Be upfront with your audience. Clearly list your price ranges, state what your policies are, and prepare your team to give confident explanations for why you’ve set them that way.
Fear #2: 'Raising prices might price out some of the audiences I’m trying to reach'
You always have ultimate control over the pricing of your shows - whether that’s setting a cap for the maximum price at which a seat can retail, or keeping a range of lower-priced tickets always available. The inventory is yours to manage and even when automating the demand-based pricing changes, you set the parameters.
Raising prices is not the endgame for dynamic pricing. Your organisation likely has goals beyond maximising revenue. You can address those goals and put your organisation’s values into action through your pricing strategy.
Your dynamic pricing solution gives you more levers to pull so that you can intentionally make space for every segment of your audience. It backs your pricing policies with data so that you can more effectively take a holistic view of how you’re filling your house.
Remedy: Be intentional about how you can use dynamic pricing to incentivise and welcome the audiences you’re trying to reach. Set maximum price points to keep prices within your desired range.
Fear #3: 'Dynamic pricing will penalise my loyal audiences'
On the contrary, what we ideally want to see happening is that with rising demand for tickets, prices increase the closer to the show you get. As such, with a dynamic pricing strategy, your most loyal audiences are rewarded for booking early.
In the past, box office teams have tried to reward early booking with early bird offers. However, those run the risk that for low-interest shows, any last-minute discounts will end up providing a better deal than those early bookers have received.
Using a dynamic pricing solution to reduce prices based on low demand does not devalue the product or de-incentivise your audience in the same way, as the lower price is not associated with a calculated, visible reduction in price. You’ll avoid making it seem like the show you’re selling isn’t as attractive or as noteworthy.
Meanwhile, offering priority booking or a flexible ticket subscription to loyal audience members can go hand-in-hand with a dynamic pricing model, allowing them to lock in a price while safely ensuring that you won’t undermine their benefits with a big last-minute price drop.
Remedy: Craft your dynamic pricing strategy to ensure that early bookers and loyal audience members always get the most visibly discounted price. Avoid drastic last-minute discounts that undermine other loyalty programs.
Approach demand-based pricing with confidence
While the term “dynamic pricing” may feel loaded, many of the fears around perceptions can be soothed through effective messaging and thoughtful best practices. You remain in the driver’s seat for your demand-based pricing strategy and how your audience engages with it.
As your organisation explores what’s right for you, continue to ask how dynamic pricing can help your customers. Ultimately, that instinct will help you craft a strategy that speaks to your audience and lifts up your community.
In order to give you a full understanding of demand-based pricing, we're bringing together a chorus of voices from Spektrix and our partners, each with their own unique take.
Explore more perspectives:
- The Internal Case for Dynamic Pricing
- Dynamic Pricing and Audience Loyalty
- Get to Know Your Audience: How to Use Data to Build a Dynamic Pricing Model
- Dynamic Pricing: Double the Income or a Double-Edged Sword?
Sarah Frost (she/her) is a Client Insight Manager at Spektrix.