
Pricing: Mythbusting dynamic pricing
Pricing: Mythbusting dynamic pricing
By
Bence Marosi
In the second of a series, Bence Marosi, pricing expert and CEO of DynamO Pricing, cuts through some of the common myths and suspicions surrounding the use of dynamic pricing.
“Dynamic pricing is only for profit driven organisations. It won’t help us reach new audiences or build lasting relationships with our communities.”
Arts organisations need income in order to operate and bring their unique value to audiences and communities. Historically in the UK this has been generated through a combination of national or local government funding, philanthropic giving and earned income (i.e ticket sales).
With a 16% real terms cut in arts funding since 2017, the shortfall needs to be picked up for the cultural sector to continue doing their vital work. Philanthropy in the UK is not as strong as in North America and although it has trended upwards since 2018 evidence shows that we can’t rely on this. The area where organisations have most control is their earned income.
Maximising this is fundamental to survival.
Increasing ticket revenue supports all organisational goals whether that is better-paid artists and staff, higher production values or more community and outreach work. Without financial stability, organisations and the value they bring for their communities is at risk.
“Dynamic pricing isn’t good for audiences, they won’t respond well…”
- When implemented transparently and fairly, dynamic pricing is accepted by audiences as it reflects market realities and provides opportunities for better deals. Dynamic pricing has been used successfully across millions of tickets across Europe, UK and US without receiving negative feedback.
- Well-set dynamic pricing can include cheaper ticket options. Buyers can benefit from lower prices during periods of lower demand, making events more accessible to a broader audience.
- Dynamic pricing can, and should, be combined with membership programmes, early-bird pricing, and discounts/coupons, to allow you to reward loyalty, and ensure that no barriers are put in place for harder to reach communities.
“Dynamic pricing is just about increasing prices, it’s not fair on the audience”
- Smart dynamic pricing adjusts prices based on demand and other factors, it’s not simply designed to increase ticket prices as far as they can go. It's used to optimise both sales and attendance, often resulting in better deals and cheaper tickets for the audience which can support your organisation to grow your audience base. Well-differentiated dynamic pricing allows organisers to offer cheaper tickets than ever before. For example, the Palace of Arts in Budapest offers lower-priced tickets as they can offset them with higher prices for more popular seats.
- Ticket buyers willing to buy early or during off-peak times can secure better prices and you can engage your members or other loyal attendees to help them understand this. Event organisers should use transparent communication, controlled maximum prices, and avoid unethical tactics like pressuring hesitant customers. Be transparent about your dynamic pricing strategies and never use pushy tactics. Prices are primarily determined by demand and its pace.
- Transparency in pricing strategies is crucial so make it clear that prices may fluctuate based on various factors. Additionally, tickets placed in the basket do not change prices, and any additional fees (e.g. handling or convenience fees) are separate from dynamic pricing.
- The decision to keep low-price tickets is up to the ticket inventory owner, but think about including affordable options as part of your strategy. More expensive tickets can offset the revenue lost from cheaper ones. Initial ticket batches may also be sold at reduced rates, and prices can decrease for events that are not selling as expected.
- Dynamic pricing can make tickets available at lower prices during initial sales or off-peak times, benefiting budget-conscious buyers. Increases that are applied should be small and incremental, rather than huge differences that will shock and annoy. A small difference is acceptable to an individual buyer, and cumulatively over time these can make a big difference to your financial stability.
In contrast to the belief that dynamic pricing simply increases ticket prices and locks out some audiences, it can be the key to understanding the true market value of your ticket inventory, and being able to price strategically. As part of a well-rounded pricing strategy, you can maximise ticket revenue and make tickets available to the widest possible audience at the same time.
10 Myths about Dynamic Pricing (PDF)
Bence Marosi, CEO, DynamO Pricing.
