How to Do Pay-What-You-Want Better

"A Smile and a Hello," © 2010 Nick Fisher, used under a Creative Commons Attribution-NoDerivs license.

“A Smile and a Hello,” © 2010 Nick Fisher, used under a Creative Commons Attribution-NoDerivs license.

Live entertainment and arts organizations sometimes do “pay-what-you-want” performances, where ticket buyers can decide how much (if anything) they want to pay to see a show.

As a marketer and someone who knows a lot about the industry, I’ve never been a big fan of this tactic. Most of the time, it’s either a cop-out on the question of actually figuring out pricing to achieve the organization’s goals, or it’s a half-assed attempt to create “accessibility,” which can be better achieved in a number of other ways.

Some people describe these performances as a type of market research, learning what people really think about your pricing. The counterpoint to that is that EVERY performance is exactly that: When you price too high, ticket sales drop and the increased price doesn’t make up for it. When you price too low, ticket sales go up, but not enough to make up for the lost revenue per ticket sold.

Not only that, but my intuition is that PWYW keeps people away from the show because, in general, consumers don’t like to spend mental energy on pricing. I can’t find the study now, but in business school, I remember learning that people paid about $1,000 more at “no haggle” car dealerships to avoid the question of how much to pay.

But here’s an idea that uses a pay-what-you-want structure, but does it in a way that might be beneficial in the short and long term. Somebody may have done this, in which case, I’d love to hear from you.

Think of it as something like a reverse Kickstarter. In other words, the performance is happening no matter what, but it does have a “cost.” Now, this “cost” shouldn’t literally be the cost of one performance. It should be the value of it, as you define it inside your organization. What is it “worth”? This is a combination of what it will literally cost, plus whatever you’d like to generate on top of this.

In this structure, tickets would be “on sale” but free. To get the tickets, people would have to put down a credit card, which you would authorize (but not charge) $.01*.

Now you’ve got a line of communication to them and a live card. Start an email and social media campaign to let people know what’s the goal of the performance. “We’re 10% of the way to $5,000 with 14 days to go.” Each one of the personal communication items can have a link to their account on your system, which will enable them to pay you something.

Then, as time goes on in the campaign, you can share with them how what they’re paying compares to what other people are paying. “The average person is paying $33.44 for the show. So far, you’re paying $10.” Avoid making it a negative comparison. You can even use pseudo-game elements, calling out the people who are contributing the most. Perhaps even going so far as recognizing or rewarding the top group at the event itself.

In fact, the campaign doesn’t even have to end after the show. An email can be scheduled to go out a day after (or an hour after) updating people further and giving them a final chance to up their contribution. If the show is good, this will probably be really effective.

I would suggest either disallowing walk-up sales (unless you have an audience that, for whatever reason, is much more nonconnected than most), or charge people who walk up on the night of the show what the average person on Kickstarter has paid for the show. If walk-up is a tiny fraction, you could ignore that and just “strongly suggest” a certain amount that’s low but not super low. Your call.

What’s really good about this is that it achieves everything that a normal pay-what-you-want performance achieves, but with some really nice benefits.

• It creates a “cause” and a goal for the eventgoers to rally around.
• It creates a precedent for them of supporting you financially and builds a relationship that can be used again.
• It eliminates some of the ickiness that many people feel about being asked for an unknown sum of money.
• It enables you to benefit financially from the “high” that comes from seeing a great show.

It’s harder to implement than just putting a hat at the door, but most box-office tools would enable this with a little tweaking.

Like I said, someone’s probably done this or something like this. If so, tell me how it went. If not, I would love to get the story from somebody who tries it.


* By the way, we’ve done a few things over the years here at Goldstar wherein people didn’t have to put down a credit card to buy tickets because they were free, and other times where a credit card and/or a very small payment was necessary. The effect is amazing. When you make even the slight commitment of a credit card, your chance of showing up at the event rises to just about the same rate as someone who’s paid the normal price. When you don’t, we’ve seen no-show rates as high as 70%. We stopped doing that a long time ago.

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