Sometimes People Prefer to Pay More

Logo courtesy of LA Stage Alliance.

Logo courtesy of LA Stage Alliance.

Terence McFarland, his team, and volunteers did a great job with LA Stage Day on Saturday.

I had a group of eight or 10 very enthusiastic listeners for my discussion of pricing. It was late in the day and there was math involved, so given that, the energy was great. I talked about Revenue Per Seat and the potential dangers in managing by Average Ticket Price. We also had time to open the discussion up to any and all questions about pricing, and there’s one I’d like to share.

If your mission (this mostly applies to non-profits) includes accessibility, how do you balance that with charging enough to make sure that you’re placing a value on the work and to fund the organization?

This kind of question is EXACTLY why you give a lot of thought to pricing. Sometimes people who are inclined toward the ‘mission’ side don’t pay as much attention to pricing because they think that to do so puts them in the grubby category of trying to make money. Of course, the very bright people who came to my session saw right through this little trap that other, more experienced people sometimes fall into.

Here’s the answer: in order to achieve accessibility and also generate the value that the work is worth, you have to get more specific about who pays what.

I met a very smart young theater marketer a few months ago who was stuck on this question. He’d created ‘accessibility’ in his theater by taking the last two of about 18 rows and making them dirt cheap. Fair enough. But what about the rest? The great majority of the seats, including those right in front of the dirt cheapies?

Exactly the same price.

He had a meaningful base of season subscribers, with good renewal rates and generally pretty decent sales percentages, and yet you could be sitting second row center or 16 rows back, way over on the left and it was exactly the same price. And this was an organization with a clear non-profit and community orientation, which was and is part of its appeal.

“What would happen,” I asked, “if you charged, say, 30% more for your best 1/3rd of the seats?”

He thought about it and said, “I think they’d pay.”

“Which seats don’t sell?” I said, already knowing the answer.

“The back of the first price tier,” he said. Duh.

That’s because they’re three times the price of the seats right behind them.

Then I said something crazy. “What if you told your new high-dollar ticket buyer that they were funding greater accessibility and making sure the house was full and making sure the organization had more resources to put back into the organization?”

“I think they’d like that,” he said.

If you’re a mission-driven organization that has got anything going at all, you’ve got at least some passionate supporters. You’ve probably also got some other people who like status. In both cases, there’s a good chance that some people will actually be happier if they’re paying more, especially if you connect the dots for them as to what their money is doing.

Then you can drop the price in the mid-tier, keep the “accessible” seats, and significantly increase your revenue per seat.

You’re happy; you’re highest-paying people are happy, and your lower paying people are happy.

Everybody’s happy! How often can you say that?

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