Ask Me Anything: Should We Lower Prices?
We have a show coming up that isn’t selling as fast as expected, should we lower prices? How should we approach discounting?
If you have a show that’s pacing behind its target, it can sometimes be tempting to start dropping prices. This is especially true in the current moment, with the uncertainty surrounding ticket sales, the ongoing pandemic, and the emerging Delta variant. We’ve heard from some clients that ticket sales have indeed slowed lately. But, simply decreasing prices across a performance is not going to suddenly increase the rate of ticket sales.
There is only one scenario where lowering prices is the right answer, and that’s when sales are slow only in your top priced sections, but selling well in the lower priced sections. If that’s the case, then you should consider addressing the price sensitivity and reducing the prices at the top.
In all other cases, you’re going to see a much better result from targeted discounting. Discounting is typically a better option for several reasons. By keeping the full price where it is, you’re maintaining a higher value message. This makes your customers feel like they’re getting more for less, which will help them feel good about their purchase and make them more likely to buy. In addition, discounting typically comes with messaging attached in a way that lowering prices does not. When someone is offered a discount, they’re incentivized to buy, and maybe to buy sooner. If you simply lower prices, potential buyers may not even know that prices were lowered, so the impact of the price change on their decision to purchase is minimal.
Once you’ve identified a performance that would benefit from discounting, the next step is to identify who the discount should be sent to. Remember that indiscriminate discounting is the enemy of an effective pricing strategy! You don’t want to send a discount to someone who would purchase without it, and you don’t want to train your audience to wait for a discount.
To discount effectively, segmenting your audience is key. Focus your discounting efforts on patrons whose behavior indicates that they will be incentivized by a discount, and only for performances that need a boost in sales. You may already be segmenting your discounts in some way. A common measure used is recency, or the length of time since an audience member has been in the building. Consider coupling that with measures such as:
- Average yield (how much they spend per ticket)
- Price preference (whether they choose the best seats or the cheapest seats)
- Time of booking (when they buy in relation to the performance)
- Frequency (how often they attended in the past)
- Performance Type preference (which types of performances they typically attend)
By combining multiple measures you’ll be able to target offers to those most likely to take advantage of them, which allows you send out discounts to fewer people while still achieving the boost in attendance you’re aiming for.
Heading into these early performances after reopening, also pay close attention to the segment of your audience who has already purchased tickets. Those patrons who have already purchased a ticket to one performance may be more likely to buy tickets to another than someone who hasn’t yet committed to any post-shutdown performances.
Watching ticket sales for an upcoming performance slow can certainly be nerve-wracking, but by avoiding drastic price changes and instead relying on strategic, data-driven decision making, you’ll make the most of ticket sales for your upcoming season.
Need help with discounting? We’ve got you covered! Our pricing consultants are here to set your pricing strategies up for success. Whether you’re looking for help with dynamic pricing and discounting strategies, setting prices, re-zoning your house, or any other aspect of pricing, we’re here to help.
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