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Combating Discount Culture

March 11, 2015

In January 2015, the owners of Ambassador Theatre Group (ATG) did an interview with “The Stage” newspaper about the year ahead, making “combating discount culture” their main aim .

If ATG are serious about it, well, they are the ones with the muscle to do it. They have the venues, the producing companies and the computer systems to really change things if they want to.

The venues they control include many of the most popular in London, and the largest regional ones outside. So anything they do is instantly felt by the theatre going public.

As producers, and major investors in producers, the dialogue about ticket pricing is easy to have. Being both landlord and tenant, communication channels are constantly open.

Most helpful, ATG’s booking system is the best around, the most responsive and clearest… and provides a tool for changing prices as quickly and often as they wish. And that’s the key to what they wish to do.

Currently, ATG (along with Delfont Mackintosh) are the major exponents of “dynamic pricing.” Prices change according to demand, and may see many seats set at “premium” then descending as low as second or third price when they fail to sell – or cheap seats suddenly becoming more expensive with demand.

Previously, theatre practise was to “move the rope.” Demand saw “fixed” changes in price, say between row S and T, becoming flexible with T suddenly joining S in the higher range. Beyond that, box office staff used discretion on a daily basis (as some still do) to get what they can for remaining tickets each day.

I’m now wondering if the way to combat discounting is the “Mousetrap” approach. The only production in London to claim “no discounts from any source” (bar the odd group rate occasionally), I’m wondering if combining the wiles of “dynamic pricing” with the salesmanship of box office staff and the hard-headed approach of “The Mousetrap” is the solution.

“Hard Pricing,” where prices are fixed, never change BUT there are more of them, could be the way forward. “The Mousetrap” has four (five from June) in the stalls, but there’s no reason why a larger venue shouldn’t have far more.

Assess each seat and price it individually, then stick to it. The ends of the rows aren’t as good as the centres, nor the front rows as those a few back, nor the back as those forward. Currently, it’s those less desirable seats, and the wildly over-priced ones which are filled by discounting. Why not price them temptingly from the start and let your venue make the money from both the booking fee and interest on advance sales? Even better, you don’t need to spend on marketing a show that’s sold out.

A quick example (fictitious and not based on any actual venue) is shown here:

example1

 

example2

It might surprise you that the difference between the “traditional” (top) and my idea (bottom) is just £6675 – 28% less gross income. That is 11% LESS than the average discount on a regular ticket offer.

Now, I created the above “on the back of an envelope” in 5 minutes, without working out those figures until the end, but I think it makes a point. If done properly, the yield from “Hard Pricing” would actually be greater. Even in this example, you could argue that 28% represents lost income from unsold seats at those high prices… which may well be full if far cheaper…

As customers realise that not only will prices not change but that they will truly be paying exactly what a seat is worth, they will become confident to book ahead. You’ll still have the ticket agencies able to sell too; as most take “live” feeds from the box office, they’ll also have the advantage of this pricing to which they can add commission.

I could go a step further and suggest the National Theatre’s approach – a huge captive “mailing list” market who buy far in advance at very reasonable prices – again major theatre owners have “club rooms” and a “card programme” which could be materials to build on; but for the moment, I commend the idea of “Hard Pricing” to the house.

2 Comments
  1. March 11, 2015 11:24 am

    This is genius, and yet completely common sense. Here’s hoping Broadway can take note sooner than later. Thanks, as always, for your insight and tremendously helpful output!

    • Steve Rich permalink
      March 11, 2015 11:49 am

      Glad you thought so, Kara. Obviously, it needs refining to show a profit over a loss compared to current methods, but it seems fairer than this “dynamic pricing” thing to both customers and producers.

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