{"id":1043,"date":"2014-02-13T20:31:49","date_gmt":"2014-02-14T04:31:49","guid":{"rendered":"http:\/\/www.artsjournal.com\/worth\/?p=1043"},"modified":"2014-02-13T20:31:49","modified_gmt":"2014-02-14T04:31:49","slug":"pricing-to-fill-the-house","status":"publish","type":"post","link":"https:\/\/www.artsjournal.com\/worth\/2014\/02\/pricing-to-fill-the-house\/","title":{"rendered":"Pricing to fill the house"},"content":{"rendered":"

\"not<\/a>ArtsJournal links to this piece<\/a> from Britain’s Guardian<\/em> on pricing at the Met (see here for an earlier post<\/a> of mine on the subject). Tom Service writes:<\/p>\n

They filled just 79% of the seats in that huge, red-velvet covered house, and made only 69% of their projected box-office revenue. For all the millions who watched the cinema broadcasts, those are astonishingly low figures for the world’s most expensive opera house. The Met’s general manager, Peter Gelb, admits an experimentation with a more flexible pricing structure, borrowed from Broadway, didn’t work: “We’re learning. I believe in learning from one’s mistakes,”\u00a0he’s quoted<\/a>\u00a0as saying \u2013 but even with an apparent pick-up in ticket sales for the early part of the 13\/14 season (thanks to an average price reduction of about 10%) it’s astonishing that the world’s most glamorous opera house can be basically be little more than three-quarters full on an average night. (That compares, incidentally, to more than 90% capacity at the Royal Opera House). For all the HD broadcasts and global reach of the Met brand, if you’re not filling your house every night, you’re not creating the kind of atmosphere that audiences want to experience and performers need to play to.<\/p><\/blockquote>\n

So, how should you price when attendees prefer a full (or near-full) house, because of the atmosphere, and possibly because of improved performance by the players? If these effects are small, we know that it doesn’t always make sense to try to fill the house – the price reductions needed to do so might cause a very large drop in revenues.<\/p>\n

But what if the number of attendees does<\/em> matter? (Studies of museum pricing look in the opposite direction: what are people willing to pay for the benefit of having a smaller<\/em> crowd? See this study<\/a>\u00a0published in Oxford Economic Papers<\/em>, by Maddison and Foster on the British Museum). There are many products that are similar to the opera case (to the degree it is in fact a matter of significance). We value social networks like Facebook, online dating sites like OKCupid, or smartphone apps like WeChat, the more that we think others are using them. In departing from ‘ordinary’ pricing rules where individual consumers don’t care what others are doing (I bought green beans today at the store and it doesn’t matter to me at all who else bought them today), there are two effects, working in opposite directions – I am willing to pay more for the benefit of using a highly-patronized good if that matters to me (that would push the price up), but the seller wants to keep the price in check if doing so generates more purchases from on-the-fence buyers, who in turn induce other consumers to become interested.<\/p>\n

Searching around a bit I found this recent paper<\/a> by Candogan, Bimpikis, and Ozdaglar in the journal Operations Research<\/em>, that addresses the pricing problem for ‘network’ goods, but as you can see a problem that on the surface doesn’t sound awfully complex, in fact is very<\/em> complex. I’m going to work on trying to decipher what’s there…<\/p>\n","protected":false},"excerpt":{"rendered":"

ArtsJournal links to this piece from Britain’s Guardian on pricing at the Met (see here for an earlier post of mine on the subject). Tom Service writes: They filled just 79% of the seats in that huge, red-velvet covered house, and made only 69% of their projected box-office revenue. For all the millions who watched […]<\/p>\n","protected":false},"author":3,"featured_media":1047,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[],"class_list":{"0":"post-1043","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uncategorized","8":"entry"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/02\/Man-Sitting-Alone-In-Empt-001.jpg","jetpack_shortlink":"https:\/\/wp.me\/p3dIW5-gP","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":1425,"url":"https:\/\/www.artsjournal.com\/worth\/2014\/07\/strategic-pricing-for-the-arts\/","url_meta":{"origin":1043,"position":0},"title":"Strategic pricing for the arts","author":"Michael Rushton","date":"July 21, 2014","format":false,"excerpt":"I'm pleased to say my book on pricing in the arts has been released - Amazon link here, and Routledge link (including for ordering e-inspection copies) here. What's it all about? As I do \u00a0on this blog, I have tried to give arts managers, and students of arts management, a\u2026","rel":"","context":"In "issues"","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"for what it's worth","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/07\/my-book.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":1018,"url":"https:\/\/www.artsjournal.com\/worth\/2014\/01\/pricing-at-the-met\/","url_meta":{"origin":1043,"position":1},"title":"Pricing at the Met","author":"Michael Rushton","date":"January 29, 2014","format":false,"excerpt":"Today the Wall Street Journal and the New York Times report on statements from the Metropolitan Opera regarding recent changes in prices and box office revenues. The WSJ reports, under the headline \"Met Opera Suffers Budget Shortfall From Pricing Backlash\": \u00a0 \u00a0 \u00a0 The Metropolitan Opera's $311 million budget fell\u2026","rel":"","context":"In "issues"","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"not just a theory, it's the law","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/01\/demand.png?resize=350%2C200&ssl=1","width":350,"height":200},"classes":[]},{"id":1976,"url":"https:\/\/www.artsjournal.com\/worth\/2016\/02\/dynamic-pricing-and-price-discrimination-are-not-the-same-thing\/","url_meta":{"origin":1043,"position":2},"title":"Dynamic pricing and price discrimination are not the same thing","author":"Michael Rushton","date":"February 6, 2016","format":false,"excerpt":"But a recent article in The Economist (!) confuses the matter. Dynamic pricing occurs when sellers adjust prices on a frequent basis to account for varying shifts in demand, or limitations in supply. Uber raises fares when demand spikes upward and drivers are scarce; sports teams cut prices for tickets\u2026","rel":"","context":"In "issues"","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"let's get this straight","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2016\/02\/apples-and-oranges.jpeg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":1621,"url":"https:\/\/www.artsjournal.com\/worth\/2014\/10\/whats-new-in-dynamic-pricing\/","url_meta":{"origin":1043,"position":3},"title":"What’s new in dynamic pricing?","author":"Michael Rushton","date":"October 16, 2014","format":false,"excerpt":"There's a good, well-informed post by Tim Baker on 'The State of Dynamic Pricing'. So, what do we know so far? First, on the term. Dynamic Pricing is not about offering different prices to different market segments, nor is it about scaling the house or other quality differentials, nor about\u2026","rel":"","context":"In "issues"","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"they will taste just fine!","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/bananas.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/bananas.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/bananas.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/bananas.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/bananas.jpg?resize=1050%2C600&ssl=1 3x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/bananas.jpg?resize=1400%2C800&ssl=1 4x"},"classes":[]},{"id":2817,"url":"https:\/\/www.artsjournal.com\/worth\/2023\/02\/can-you-scale-the-house-at-the-movie-theatre\/","url_meta":{"origin":1043,"position":4},"title":"Can you scale the house at the movie theatre?: Updated (no, you can’t)","author":"Michael Rushton","date":"February 8, 2023","format":false,"excerpt":"US cinema chain AMC has announced it will start to have differential prices for movie seating: Three pricing tiers will soon be offered. For example, the highest-end \u201cPreferred\u201d tier are in the middle of the theaters and will be priced at a \u201cslight premium\u201d compared to its \u201cStandard\u201d tier, which\u2026","rel":"","context":"In "issues"","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"At the movies","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2023\/02\/rose-scaled.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2023\/02\/rose-scaled.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2023\/02\/rose-scaled.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2023\/02\/rose-scaled.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2023\/02\/rose-scaled.jpg?resize=1050%2C600&ssl=1 3x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2023\/02\/rose-scaled.jpg?resize=1400%2C800&ssl=1 4x"},"classes":[]},{"id":1660,"url":"https:\/\/www.artsjournal.com\/worth\/2014\/10\/what-is-dynamic-pricing-a-clarification\/","url_meta":{"origin":1043,"position":5},"title":"What is dynamic pricing? A clarification (updated)","author":"Michael Rushton","date":"October 27, 2014","format":false,"excerpt":"'Dynamic pricing on websites: illegal or unfair?', asks\u00a0\u00c9lo\u00efse Gratton on her blog. But the post confuses various pricing strategies, not all of which are 'dynamic pricing'. Dynamic pricing, also known as \u201cadaptive pricing\u201d, \u201cdynamic pricing\u201d or \u201cdiscriminatory pricing\u201d \u00a0or\u00a0first-degree price discrimination, is defined as a practice where organizations attempt to\u2026","rel":"","context":"In "issues"","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"first-degree","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/flea-market.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/flea-market.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/flea-market.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/flea-market.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/flea-market.jpg?resize=1050%2C600&ssl=1 3x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/flea-market.jpg?resize=1400%2C800&ssl=1 4x"},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/posts\/1043","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/comments?post=1043"}],"version-history":[{"count":0,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/posts\/1043\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/media\/1047"}],"wp:attachment":[{"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/media?parent=1043"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/categories?post=1043"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/tags?post=1043"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}