The Chicago Tribune explores the potential and pitfalls of variable pricing in the arts — charging different amounts for comparable seats, based on individual demand. The practice, which has long been the standard in airline ticketing and high-demand entertainment, is slowly entering the nonprofit cultural world, especially in Chicago:
For the last three years or so, the Chicago Symphony Orchestra has quietly raised single-ticket prices for concerts, once the organization’s computerized models indicate that early sales suggest the event will likely sell out. Premium single tickets are under discussion at the Lyric Opera of Chicago. Goodman Theatre executive director Roche Schulfer says his non-profit group is seriously considering offering premium, last-minute tickets to hit shows to patrons “who are also willing to make a contribution,” perhaps as soon as next season.
The strategy of individually varying pricing — more broadly called ”yield management,” since the goal is to maximize the total dollars earned, aka, the yield — makes many nonprofit managers and marketers woozy, as it feels more commercial and profit-seeking than they’re used to. But if done with care and respect to mission (especially that part of the mission related to broad access) it can be an essential way to remain sustainable.
The two challenges of variable pricing are mechanical and cultural. Up until recently, it’s been fairly expensive to alter the price of a ticket at whim — not to mention the cost of the data infrastructure and market intelligence required to inform that whim. Now more advanced ticketing and reporting systems are bringing those costs down. But the cultural challenges remain large — with patrons fairly used to being subsidized, even when they’re willing and able to pay more, and with staff and leadership nervous about pushing the envelope of profitable behavior.
For arts events that don’t sell out, variable pricing has less of an up-side (it’s those high-demand, last-minute tickets that can really boost your yield). And, in fact, we’ve grown quite comfortable with the discounting side of the strategy. But for the few that do sell out, better yield management could give an arts organization more cash and capacity to fulfill its mission elsewhere.