We’ve all experienced dynamic pricing in various scenarios, whether it be purchasing airline tickets or a paying for a taxi. It’s a standard across multiple industries, and well known for raising profits for businesses that use it. Yet, it’s estimated that only about one-third of businesses are using dynamic pricing to bolster their bottom line. If your organisation falls into this category, it’s time to re-examine why, and consider how to best implement it.
What is Dynamic Pricing?
Dynamic pricing, also called real-time pricing, is a flexible pricing model. The goal of dynamic pricing is to adjust prices in response to market demands. If implemented correctly, arts organisations can drastically improve their profit margins, but testing and experimenting with different strategies is imperative.
Allocation-Based Dynamic Pricing
With allocation-based pricing, a organisation offers a certain number of tickets at one rate. When those sell out, an additional tier of pricing becomes available, and so on, and so on.
Date-Based Dynamic Pricing
With date-based dynamic pricing, the organisation schedules rate increases as the show date nears, regardless of how many seats have sold.
Why Dynamic Pricing Works
Depending on which survey you check, average revenue increases range from 10-40% after dynamic pricing is added. The benefits to the organisation are obvious, but what of the benefits to the consumer? No doubt, this is the part that can upset even the most loyal customer base.
As an end consumer, I feel quite ambivalent towards it. I’m usually a late booker, so I generally suffer at the hands of dynamic pricing, but your customers don’t have to feel like it’s something they must “suffer.” While most of us think of it like we think of Uber and airline tickets—getting gouged for buying at the last moment – this is really a public relations issue. Consider how you position it; something like happy hour at the neighbourhood pub. It’s the exact same concept, but turned around. Customers know they can get a better deal by showing up earlier, and so some plan to go early and catch the deal. Getting the lower-priced drinks is a reward, but showing up after happy hour ends is no punishment, even though you pay slightly higher prices.
Best Practices for Dynamic Pricing Rollout
You want your patrons to view your dynamic pricing scheme like they do happy hour, not like Uber or airlines. To do that, you’ll need to plan your rollout with them in mind.
Be Transparent: Transparency is key. No matter what pricing scheme you go with, make sure all marketing materials mention how you’re pricing tickets. This way, they won’t feel “duped” by paying higher prices later. Instead, it will serve as a positive motivator to plan and get tickets early.
Hype It Up: Monitor your sales and publicly mention how close you are to the price increase. The scarcity of lower-cost seats will motivate people to take action. Use social media and your website to play this up and encourage early bookings.
Reward Loyal Customers: Give your loyal customers a leg up when it comes to scoring lower-cost tickets. Let them know through email and social media that you’ve released a certain number of tickets or are providing an early bird sale just for them. Boost prices when you begin your main marketing campaign or whenever your early bird allotment sells out.
Test: Start by testing dynamic pricing on a single show. Then, use A/B testing and experiment with which type of pricing scheme works best, what prices to set, and what timelines to use.
Research: Dynamic pricing may not be a good fit for every show, so do a little research and see what types usually sell out and when most tickets are sold. You may find that some of your shows are the type that people plan their week around, whilst others attract people who are merely looking for something to do as the weekend approaches. The latter is not likely to command higher prices, while the former most certainly will. Your A/B testing will be very telling.
Dynamic Pricing is Included in Ticketsolve
As part of our ongoing commitment to helping theatres improve their profit margins and deliver the very best customer experience possible, Ticketsolve allows you to create a custom dynamic pricing strategy with just a few clicks.
Our dynamic module allows you to create multiple ticketing allocations which can be set up according to best available pricing.
In the example below we have 4 Pricing Allocations, once the first allocation (cheapest) is sold out the next cheapest allocation is then available, which is fully visible to the consumer.
In the example below there are only two allocations available as the other two have been sold out.
Before engaging in dynamic pricing, it is best to do a trial on only one show. Extensive research will help you determine what pricing schemes will work with your audience base. This is something that can be trialled on a single show, and extended out from there.
Ready to Integrate Dynamic Pricing?
Ticketsolve is here to help. If you’re a current Ticketsolve user in need of assistance, feel free to reach out to our 24/7 support team at any time. If you aren’t using Ticketsolve to boost your organisation’s revenue and improve your customer experience, we’d love to walk you through dynamic pricing and all the other powerful tools we offer. Contact us today for more information.