Over at 2am theatre Trisha wrote this post on the benefits of dynamic pricing that merits a response.
A quick primer: This is how she defines dynamic pricing -
Under this model, you advertise your lowest regular adult price, with the phrase “Starts at $XX.” Then you make sure the lowest advertised price requires them to buy early, come to the least popular performance night and sit in the very visible but not very good seats right up front on the side.
If they want a better night, a better seat, or the chance to wait until the last minute, it will cost them more. And if you haven’t advertised your additional prices in advance, you can adjust these numbers on the fly, experimenting until you find the right price breaks for this audience for this particular show.
About 2 years ago dynamic pricing became the big idea. I can remember sitting in a conference session and hearing a presenter brag about how he got this idea from the airline industry.
The airline industry.
Think about that for a second.
The airline industry is probably one of the most disliked industries in America. There are like 2 profitable airlines and the rest are one step away from Chapter 11.
*This* is where we want to get our ideas?
I understand the concept of dynamic pricing and I understand why its so attractive. The performing arts are expensive, donations and other forms of contributed revenue are on the slide, so there is a certain logic to finding the ideal price/demand ratio.
But it worries me a bit when people talk about pricing models that could easily add another $10-$15 to a ticket with such . . . enthusiasm. Particularly when many of us work in nonprofit arts organizations.
The question isn't whether you can use dynamic pricing. Of course you can. The question is SHOULD you use dynamic pricing and that strikes me as a much more complex conversation that raises difficult questions:
What message are we sending to the public when we do that sort of thing?
Could dynamic pricing undercut the "case for support" that many nonprofits use to solicit contributed income?
How does your audience change when you put dynamic pricing into place?
The whole concept just feels like a mixed message to me. On one hand we are determined not to let someone pay $1 less for a ticket then the ratio says they should.
On the other hand we are community organizations that depend on generosity and goodwill to make our way.
Again, I understand the reasons for dynamic pricing. I'm not some kid standing outside the circle throwing spitballs. I've devoted my career to helping artists generate more revenue from their art. But dynamic pricing seems like ones of those things that could easily slide off the rails and turn an organization into something they never intended on becoming.
I've heard advocates of dynamic pricing say things like:
"Nobody is going to notice the difference."
"It's just a few extra dollars."
"If they can pay, they should pay."
And I'm pretty sure the people saying that didn't come into the field hoping that one day those sorts of words would be coming out their mouths.
So I'm going to suggest that you be VERY cautious when using dynamic pricing and that you really consider the long term implications. If you look at it carefully and decide it's right for you then knock yourself out.
Just be sure you're doing the right thing . . . and not just the easy thing.