The Easiest Mistake in the World to Make About Pricing …
… is thinking there is such a thing as a “discount buyer.”
And I can prove it to you.
Next time you’re gathering six or eight of your co-workers for a meeting and have a few minutes before it gets started, do this little experiment.
Ask the group if any of them have a band or musical act that they really, really like but that most people in the room aren’t likely to know. Most people will have one.
Pick one of these people and ask them for the name of the group. They’ll say “Panda Crying Love” or whatever. “Great,” you’ll say, “anybody else heard of them?” Hopefully, you’ll have at least one or two people who haven’t.
Then ask the Panda Crying Love fan how much they would pay for a nice ticket, right down front for a Panda Crying Love concert. Their eyes will light up and they’ll start picturing this wonderful experience. After a few seconds, they’ll probably say a number north of $100, but that could vary a lot. Still, if they really are fans, they’ll put some real value on this ticket.
Then turn to one of the people who didn’t know the band at all and ask them if they would pay the same amount as the fan.
They will say ‘no.’ Ask them if they’d pay half that. They still say ‘no.’ You can keep going down and the ‘no’ isn’t likely to change.
Then ask the fan to think of two or three really great things about Panda Crying Love and tell the person who’s never heard of them. They’ll come up with some interesting stuff: “the lead singer has an amazing voice, like Freddie Mercury meets Elvis Costello; they had a song in an iPod commercial that you probably know; in the show’s finale, 20 inflatable pandas fly around the arena and do a laser light show.”
Now ask the non-fan if that sounds interesting. The enthusiasm of the fan is usually at least a little contagious, and they’ll say “Yeah, that sounds interesting.”
“So would you pay $125 for the ticket now?” you ask.
“How about $100?” you ask. They think it over. “$80?” “$60?”
At some point, because they’ve been made AWARE of the band and given REASONS TO CARE about the band, they say “Yes, I probably would for $x.”
Is that person a “discount buyer”? Is the fan a “full-price buyer”? Of course not. The fan is a full-price buyer because they place more value on the ticket in question, not because they are from a tribe of people known as “full-price buyers.”
You could easily have done this experiment and reversed the roles of the two people.
The way it works is this: different people place different values on the same thing. The problem with live entertainment MOST of the time is that many, many more people are like the non-fan: unaware, uninformed, and uninterested. In that state, they place little or no value on the thing in question.
Over time, either they will continue not to know, care or place any value on your show/event/team/venue/etc., or they will become aware, become interested, and their sense of value will grow. But it grows from zero up.
The vast majority of the world does not know your product exists, and of the tiny minority that do, the majority of them barely knows what it is and has little or no sense about why they should be interested.
That’s the real challenge.