The dynamic pricing innovator Sean Kelly, founder of Vatic (dynamic pricing for performing arts and ticketed venues) looks at how we can use dynamic pricing to better understand our audiences.
The performing arts, by their very nature, are ephemeral. A performance is not a thing, you can’t drive it away, or have it delivered via Prime. It’s an experience.
But just because it is temporal by nature does not mean that its value goes unmeasured.
Likely buyers come into your purchase path with a calculus in mind that is based almost entirely on risk aversion. If they are going to spend $XXX on a pair of tickets, how likely is it that they will have a good time? More importantly, they are setting a value on each performance individually. We see this all the time where a Saturday evening performance will sell extraordinarily well, but the Tuesday night performance will be hard to fill — for the exact same title. This paradox, the idea that the same experience can have more value on one day of the week vs. another day of the same week, gets to the heart of value proposition.
To truly understand your organization’s value proposition, you need to ask your patrons, “How much is this worth to you?” Arts professionals do not buy tickets (we get industry comps) so our concept of value proposition looks very different. We are in the industry, so what excites us may not excite our patrons — just because you love Sondheim does not mean your patrons will love The Frogs. Even if you could account for your own internal biases, the market forces that guide buying behavior are far too large and complex to lay on any one person’s shoulders.
Dynamic pricing can help you understand value proposition by delivering important data on how your patrons are assessing value. With a robust dynamic pricing program in place, where pricing moves up and down according to demand, you receive real time data that over time paints a picture of true demand in the marketplace. The really exciting thing about this data is that it is coming from actual buyers, so even if the John Denver cover band is selling like hotcakes, and you can’t understand why, you can trust that your buyers do, because you are allowing them to set the value.
Our mission is to serve the community, and while it would be amazing if we could charge $10 for every ticket, it’s not feasible if we also want to pay people a salary. By gaining a better understanding of how our patron’s place value on our programs, we ensure that we are finding the right price for every performance.
Sean Kelly is the founder of Vatic, a software company specializing in dynamic pricing for performing arts and ticketed venues. www.vatic.tech
First published on LinkedIn.