Filthy Lucre Part Two: Redefining Reward


We do not make theater to make money.

I’ll say that again.

We do not make theater to make money. Our donors don’t contribute to us so we’ll make money. Our boards don’t support us to make money. We don’t sit up at night dreaming of how we can tweak our business models to bring more dollar signs into our realm.

(Note: Haven’t read Filthy Lucre part one? Read it first to get up to speed.)

“BUT- Broadway!” you say. To which I reply, most Broadway investors never see a return on their investment. Most Broadway shows close before “break even.” Don’t get me STARTED on the business illogic of Broadway.

We create theater for one reason:

To have our work seen by an audience. Period.

There may be goals that follow from that core mission, like influencing the culture, transforming lives, investigating the human condition… and a theater company may have a very tiny, super specific subset of “audience” that they wish to be seen by. But still, being seen is the point.

Which may explain why it is so common for theater companies to fall into the trap of “If we make it FREE, it will SELL OUT.”

Our core drive is full houses, not full wallets.

So it’s actually completely rational on one level to assert, “Well, money is not the reason we’re doing this anyway. So why not stop trying to make any?”

“And at least,” you tell yourself, “I’ll get an audience if it’s free.”

No. You’ll get an audience if you find your niche and expend the resources (money and/or time) to find the people attracted to that niche and make a compelling invitation to get them to attend.

Free is not a reason for people to see your show. Its an excuse you use to avoid taking a public stand on what your art is worth. Free can sometimes lower the barrier to get people to show up at your performance. But it is not the only, or even necessarily the best, way to do that.

Maybe you are grant funded or have a trust fund, so you don’t feel you have to charge. But grants end, trust funds run out (or walk away when their owners move on to other projects). And neither help your audience develop a deep sense of the VALUE of your work. Subsidized free theater trains audiences that all theater should be free. That somebody else is “responsible” for paying your artists, playwrights, designers. And that trickles down to the whole theater ecology, lowering the pay scale of every theater artist in your community.

Okay, so. We want sold out, and we don’t exist to make money. But we still want to create and encourage a sense of the VALUE of our work, to develop the habit in our audience of supporting art through their pocketbooks. What are some ways we can do that?

Here’s 5 Better than FREE pricing strategies.

We’ll start with the most common:

1. Pay What You Will or Sliding Scale. In this model, you ask people to decide at point of purchase how much they think their experience will be worth. You rely on social pressure to keep people from stiffing you. This technique is most commonly used as a way to get fellow theater folk into the theater without technically comping them.

The Challenge:
It creates a socially awkward moment for each audience member- “How much should I pay? How much is too much? Did the box office person give me a dirty look because I paid too little?” Also, “Pay What You Will” nights are almost always cash based. So even if you DO get a new audience with this pricing strategy you have no easy way to capture contact information so that you can develop a relationship with them and invite them to return.

The Opportunity: It lowers the barrier of participation in the arts for people who literally can’t afford more than $X.

2. Pay What You Think Its Worth. Some companies are inverting the “Pay What You Will” model by only requesting money after the performance. The theory is that, in the glow of having a wonderful time, patrons may pay more than they would have at entry. Your upside revenue potential (if they loved the show) is higher, and if framed properly, this strategy makes the audience feel like they are directly rewarding the performers whose work they just saw. Social pressure to contribute is still there, while the barrier to entry is still lowered by the possibility that they could still end up getting the show for free if they choose not to contribute.

The Challenge: Unless you ask people to put their “contribution” in check form, you are still not collecting contact information that will allow you to develop on ongoing relationship with that new (presumably impressed) audience member. Also, there’s little to no incentive to reserve in advance, and your audience comes in with a very low commitment to the show. So from a planning point of view it could be feast or famine, making long term growth difficult.

The Opportunity: This is a much better strategy than “pay what you will” for discovering what other people think the experience you provide is worth. Could be a great launching point for a company who needs to build audience and name recognition. Later performances could have set prices with a note that says something like “Don’t trust us. Trust our audience- On average they paid $XX even though they could have seen us for free.”

3. Free Beer with Purchase. This strategy says, You’ll pay money in advance, but the experience includes a free beer (or three). Donated beer can make this an effective (and CHEAP) way to lower the barrier to participation (hey, at least I’ll get a beer out of it), while still enforcing a set value for admission.

A variant on this is the more common “free show with purchase” where you perform in a bar, patrons pay for the booze and get the show for free. Your company gets a flat fee or a cut of the bar. In my experience, however, this strategy yields patrons who are just there to drink and could care less about the show. Plus, most bars are unwilling to share a cut of the bar with entertainment.

The Challenge: Tipsy, distracted patrons. And obviously this strategy doesn’t work at all for family-centered shows. It can also be illegal in some states, depending on the alcohol laws. And it goes without saying that you’ll need a venue with a liquor license (or an event permit) to make this work.

The Opportunity: Many people who come to your show won’t even take you up on the free beer, though it may have been a reason that helped get them (or at least some of their guests) there. And, you can raise your prices as your popularity grows, keeping the beer benefit while shifting the mental value equation more in favor of the performance over time.

4. Moneyback Guarantee or Rebate Offer. Charge a set price but advertise that if they didn’t like the show, they get their money back. Some companies say “leave your ticket stub with your email address in this box and we’ll contact you to arrange a refund.” This allows for online advance sales, credit cards, and capturing contact information. The rebate variant says, “If you didn’t like this one, we’ll send you free tickets to the next one.”

The Challenge:Its hard to say whether this really lowers the barriers to attendance (or increases the perceived value of the show). It essentially asks the question, “did you get your money’s worth?” and relies on the fact that most patrons will love it, or not want to go through the hassle of applying for the refund and explaining what they didn’t like. The rebate offer is a bit counter-intuitive – “If I didn’t like THIS show,” you might ask, “Why will I want free tix to the NEXT show?”

The Opportunity: You often don’t get to hear the negative feedback from your patrons. An offer like this can create a dialogue between you and your most disgruntled patrons, potentially transforming their view of your company through good customer service and converting a bad experience into a great one.

5. Charge High. Offer Low. This strategy has so many variants that it really deserves its own post. So we’ll do that next. Stay tuned.

  • April 2, 2010
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