#TBT: The Third Ticket
I asked the Selling Out team to put out a second Throwback Thursday article today because I want to help you think about something that I know is tripping people up. I hear live entertainment marketers talk about ‘hitting goal’ for a show and then turning their attention elsewhere. This is understandable, but the wrong way to think about it. I once said that “the last $100k you sell is just as valuable as the first $100k you sell,” and that’s true, technically, but I was recently corrected by a Broadway producer who said, “No, it’s worth way more because it’s pure profit.” And that’s when I thought it was time to publish this piece again.
Live entertainment and arts have a screwy business model. Almost all the costs are locked in. The minute you decide to do the event, you’re committed to most of the costs, even if the show or event bombs. Bummer.
The good news, though, is that once you get past break-even, the business model starts to get really good really fast. For most events, break-even is somewhere in the 60 to 70% sold range. Generally speaking, if you sell two out of three of your tickets, you’re not going to lose money. That’s a very rough rule of thumb, but that’s what I’ve seen.
That means the THIRD ticket of the three is the magic ticket: The Golden Ticket. It’s the One Ticket to Rule Them All. Because the deeper you get into selling the last third of the house, the more splendiferous your financial results become.
Put together a truly spectacular event. Market it. Plan it. Fuss over the logistics and pricing. Obsess over that event for months and months. Go on sale and start selling. The sales roll in … 25% sold … they keep rolling in … 50% sold … the sales keep rolling in … 66 2/3% sold. You hit break-even!
Wow, that feels pretty good, but wait. My net financial result from this event so far: $0. Hey, I started with $0! Sure, putting on the event is fun and satisfying, but still, $0?
From two-thirds sold to three-fourths sold, you’re making money. Not a ton, but real money. If the show costs, let’s say, $100k to produce and you break even at two-thirds sold, then by the time you hit three out of four tickets sold, you should be up. Sure, it’s only enough money to buy a stripped-down subcompact Kia, but it’s a new Kia, so that’s something.
The further you go into that final one-third of tickets, though, the better it gets. Go all the way, and you’ve got enough in the bank from this one event to buy a much fancier car. Do NOT use the money to buy a fancy car. It’s just an illustration of the value of the Third Ticket.
I have heard and seen a number of live entertainment and arts marketers who live for break-even and who actually stop working on marketing once they’ve hit their “goal.” This goal is usually just a bit above break-even, enough to declare victory on the show and move on.
Both financially and from an audience point of view, if you do this, you should reconsider. You’re JUST getting to the good part! Going from 70 to 80% sold on a strong show is financially every bit as valuable as “saving” a show from losing money by bringing it up 10% in order to hit break-even. Dollars are dollars, wherever you get them.
From an audience point of view, if you’ve got something good, don’t declare victory and depart the field. Push it! Don’t try to ‘guide’ people into other shows to prop them up. Let them know you’ve got something good and that they shouldn’t miss it. They’ll be glad you did. And, of course, the money you bank from these shows allows you to be more risk-taking elsewhere.
Break-even isn’t the finish line. It’s the start of the final stretch, so grab that second wind and win the race. Sell that Third Ticket!