How to Talk About Pricing… with More Light Than Heat
Why is it so difficult to discuss how we price tickets?
I want to note right away that I’m not asking why we struggle to SET ticket prices; for very good thinking about pricing, I suggest you read through Trisha Mead’s posts on the subject. I’m asking why we struggle to TALK about setting ticket prices.
In his very thought-provoking book Predictably Irrational, behavioral economist Dan Ariely tells an instructive story about the AARP that I think begins to answer this question.
A few years ago, the AARP tried to solicit lawyers to offer their services at deeply discounted rates – $30 an hour, to be exact – to help retirees. No dice. When the AARP subsequently asked lawyers to donate their time, however, there was suddenly great interest. Not exactly rational on the lawyers’ part, no?
Ariely explains that in both instances, the lawyers were being asked to be part of the social contract: to do good for the sake of doing good. In the former instance, however, there was also a small market element at play as well. As has been shown quite exhaustively in behavioral economics research, he illustrates, the presence of market norms in an exchange or relationship significantly undermines (if not destroys) the effect of social norms.
A quick definition of terms: social norms are the touchy-feely, largely-unwritten rules that govern the ways in which we live together as human beings; market norms, by contrast, are the rules that govern the ways in which we transact business.
As theater practitioners, we live in a world in which social norms predominate and market norms are seen as vulgar and distasteful. This is because our art relies on social norms to function; as Ariely makes clear, market norms obliterate social norms; therefore, we are instinctively afraid to bring market norms into our theaters.
The conversation about pricing would seem, on the surface, to require an engagement with market norms. That’s why we get anxious when we talk about it. We don’t want to harm what really matters to us.
It doesn’t have to be that way. Instead of using market norms to talk about, think about, and determine pricing, we can use social norms.
For example, instead of commodifying seats – as in “How do we sell seats?” – we can think about the services we provide, and the value we receive in exchange for those services. Instead of talking about “pricing models,” we can talk about rewarding loyalty and discouraging unwanted behaviors.
If we do that, I believe we’ll find that we have more in common than we realize.
We all want our work to be seen by lots of people. We all want lasting, valuable relationships with our audiences. We all want people to value the work we do very highly. And we all want everyone who wants to see our work to be able to see it.
Most importantly, we all want the prices that people pay for their tickets to represent the value they find in the work, modulated by what they can afford.
(Note, for the record, that none of the above desires or values are solely the province of not-for-profit theater; they apply equally well to commercial theater, too.)
Once we acknowledge our common ground, the conversation should become easier. Decisions about what pricing models will make our shared vision manifest might still be complicated – again, I refer you to Trisha Mead for clarity – but they shouldn’t be heated.
Today’s post by Ken Davenport speaks to a similar idea, the thought that we can have a rational, optimistic conversation if we’re going to innovate, if we’re going to draw new people and sponsors to the table.
http://www.theproducersperspective.com/my_weblog/2010/09/what-do-innovators-have-in-common.html
I think the idea that we shouldn’t be having heated conversations about our values is absurd. And ultimately, conversations about money are about values (and value, obviously). “Dynamic Pricing”, as it is currently used is an excuse for large theaters like Trisha Mead’s employer and Arena Stage to jack their ticket prices up to levels that go against my values of what theater is, who it is for and how much it should cost. To ignore that part of the conversation ain’t gonna work.
Thanks for sharing your thoughts, Isaac… and, I should add, illustrating precisely the kind of dialogue that inspired this post in the first place.
In an age in which our public discourse has degraded to shouting and insults, and nobody seems to be listening to anyone, I would think it evident that we need more light…if only to balance out the heat, let alone replace it. Yes, we should be passionate about what matters to us… but I believe a rational and civil conversation is always, in the end, more effective.
To that end, I’ll say that I’m guessing we share similar values about what theater is and who it’s for (or should be for) — though I’d like to know more about your values on those fronts, if you’d care to share your thoughts.
While I don’t agree that there’s an amount that theater “should” cost, I do think it should be accessible, financially, to everyone… and I sit on the board of a theater company that keeps its ticket prices at $10 as an inherent part of its mission to ensure accessibility. (I can’t resist adding that we’re inspired by the pricing models used by Ian Mackaye of Fugazi — a rock star, I note, in a nod to your recent rant on that subject.)
I look forward to continuing the conversation…in whatever mode you choose to respond.
Gwyd,
If we agree on so much, why address me in such a patronizing manner?
What actual content of my comment is inaccurate or sheds more heat than light? I said the following:
(1) Discussions about our values are going to be passionate.
(2) Dynamic Pricing is in its current form in theatre a buzzword used to excuse institutional actions that I disagree with and have ethical qualms about.
Which part of it was uncivil? Specifically.
In particular, I thought the following words and phrases were heat-inducing, rather than light-shedding:
1) Absurd
2) Jack their ticket prices up
3) Ain’t gonna work
Those concerns aside, I would genuinely like to understand the institutional actions you disagree with and have ethical qualms about, because I genuinely do think — and I’m also genuinely not intending to be patronizing here — that I might learn something and I might share them.
At the moment, though, my understanding of dynamic pricing — as it’s employed at places like Trisha’s institution and Arena Stage — doesn’t raise any red flags for me.
I’ll concede #1. That was intemperate. But the other two terms are mererely colloquialism. If you went to your deli on a Monday and on a Friday and found out that every day in between they raised the price of milk by 10%, you’d turn to a friend and say “wow, they really jacked the prices up around here”. Similarly “ain’t gonna work” is part of a larger sentence, making a larger point which is that it is impossible to avoid passion when we talk about things we care about.
As to the question at the end… what I have seen in my fifteen or so years as a theatre professional is a gradual (and then much faster) slide as nonprofit theaters begin to act more and more like for profit corporations. Enhancement, outsourcing of talent, firing of literary departments, expanding of admin salaries and staffs over artists has lead us to a particular place that is not, in my mind, sustainable. Dynamic Pricing is simply the latest piece of this. People are getting all excited about a model that has had some success at giant corporations.
Now I should interject here that part of the problem appears to be ideological differences between myself and many of the people at 2AMT. Over the past month, as I’ve followed the twitter feed and this website, I’ve noticed that in general the 2AMT position appears to be a mix of going to bat for institutions, jusitfying their behavior and then advising smaller theater companies to adopt the practices that I find horrifying.
I’ll use this pricing thing as an example of the above that I hope will also provide an answer to your questions. When I originally posted about Arena Stage’s pricing, my point simply was regardless of the process that got us there, a nonprofit charging $95-120 for a ticket was wrong. The general response was “well, if market forces will dictate that price, it’s cool with me.” I found this response shocking and bewildering. It used to be that we believed that nonprofits had a duty not to act like commercial producers, to be different, to explicit *not* be governed by market forces. That’s why the nonprofit tax code was developed in the first place. It also used to be that there was wide consensus that ticket prices being too high was one of the many reasons that theatre is so irrelevant to people’s daily lives. It used to be that the Signature in NYC was held up as a model because every ticket for their regular runs cost $20. It used to be that we were horrified when Shakespeare int he Park created advanced tickets sales and started charging for them.
Now it seems that not only is it okay, but the specific business practices that lead to what in my mind are obscenity high prices are things we should be emulating at all levels of the industry.
I find this deeply troubling and I find it remarkable that in the last year the theatrosphere has changed so radically from a place where institutions were critiqued (both positively and negatively) to a place where the producer of “My First Time” and “Altar Boyz” is held up as an innovator and we scramble over ourselves to emulate a business as unsucessful and widely hated as commercial airlines.
I got off topic with this comment, but I felt it only fair to explain why I might’ve been a little more heated than I meant to be in my initial response.
Sorry brief addendum: I’ve been a reader of 2AMT since the beginning. I’ve been reading it *a lot more closely* in the last month.
I’ll concede #3. On #2, however, I’ll say that while I might use “jacked their prices up” with a friend, to the owner of the store I might say “raised prices” instead.
I hear your concerns about non-profit theaters emulating for-profit corporations… but I don’t share them. While I have a great deal of trouble with the greed that dictates the behavior of many a huge corporation – the entire insurance industry, for example, seems to be consumed by it – I see no reason to dismiss everything they do. They have a great deal more resource with which to experiment and try new techniques that are worth emulation. In fact, I think our collective antipathy toward things corporate has stifled our ability to learn more swiftly than we might have.
I have, however, seen many of the similar things you’ve seen in the same time period, so I don’t dismiss your concerns. I attribute them, however, to different factors. I lay the blame primarily at the great cultural shifts we’ve been seeing in the last decade especially: the rise of the internet and the personalized cultural experience, which has offered crippling competition, on one hand; the movement toward increasingly conservative allocation and collection of taxes, which punishes arts organizations, on another.
As for what you’ve noticed on 2AMT… I can’t say I’ve noticed it myself. I have seen praise for institutions where it’s warranted, or where people think it’s warranted, but I’ve also seen critical discussions as well: the conversation about the ticket prices for the show at Arena are good example. You weren’t the only one who was raising questions then, as I recall – nor are you now, as witness this very thread.
I do agree that the conversation around pricing has shifted somewhat: from praise for low ticket prices to the investigation of more complicated business practices with regard to pricing. What I have seen with regard to dynamic pricing, however, is that it doesn’t run counter to a one key value I think we share: making sure that anyone who wants to see a show at a non-profit theater CAN in fact see one.
The goal, furthermore, isn’t to emulate commercial airlines, but to take what they’ve done and implement it in ways that remain consistent with our core beliefs: a tricky business, no doubt, but a worthwhile endeavor. After all, a hammer is a hammer, a rake is a rake; dynamic pricing is merely a tool, and as long as that tool is wielded to positive ends, why should we object?
Thank you for sharing your thoughts. I appreciate it.
“I hear your concerns about non-profit theaters emulating for-profit corporations… but I don’t share them. ”
What else is there to talk about? You’ve proven my point, that there’s an uncrossable ideological difference here. We can be nice to each other about it, but the difference will still be there. Your perspective completely lets ADs and EDs off the hook. “It’s all of society’s fault,” ignores any number of problems that have either sprouted up or gotten worse over the last two decades. I mean, obviously, it’s your perspective and you’re welcome to it and I don’t think that makes you a bad person or anything, it’s just not a perspective I share particularly after having spent the last few years studying the field. Even many higher ups at theaters will tell you over a beer and off the record that the system (including their theater) is the past tense of the f-word with the opposite of down attached to it. There have been sincere efforts to make it better… David Dower’s work at Arena, Outrageous Fortune, the other Mellon studies, Mike Daisey’s “How Theater Failed America” etc. and there are plenty of individuals within the system and a small handful of institutional theaters actively trying to make it better. I recognize that. But what we’ve seen over the past two decades is a collective abrogation of theaters’ obligations (both letter and spirit) under the nonprofit tax code and the wholesale abandonment of the values that theaters continue to espouse in their fundraising material.
There may not be anything else for you and I to talk about (though the general conversation happily continues)… but I would like to add that you, in turn, have proven my point — the point I wrote this post about, really — which is that it’s preferable to have civil discourse, even when we disagree. (I especially enjoy “the past tense of the f-word with the opposite of down attached to it” — if that’s not civil, no discourse is.) Thank you for the conversation.
Ha! this comment brought a smile to my face. I curse a great deal, but I had a feeling that if I dropped an f-bomb in a room full of strangers, it might get taken the wrong way.
I might also add, belatedly, that using a nickname for me — given that we’ve never met — might also be considered uncivil. How would you feel if I referred to you as Ike? On the other hand, plenty of friends call me Gwyd, once they know me, and I associate it with endearment, so it doesn’t (and didn’t, actually) offend. I mention it merely because others have called it to my attention offline.
I normally when commenting abbreviate people’s names (i.e. GS etc.) It’s a pretty standard internet practice. If I was being insulting, I would have called you something like “Gwyddy”, which is clearly diminuitive.
I shall choose to take you at your word.
I work in a classical music org that uses dynamic pricing, and I can say with full confidence that you are not seeing all sides of it.
First of all, there are almost always some seats that are kept affordable. They may not be on the center of the main floor, but the music still sounds really really good in the upper balcony and gallery.
Second, dynamic pricing generally results in price increases because the starting prices are as low as possible, and because we don’t usually call discounting “dynamic”. If the prices start out higher than people are willing to pay in theater, you certainly see discounting and clearing, through Goldstar, TKTS in NY, Hottix in Chicago, etc… That isn’t generally called dynamic pricing, but really, the discounting decisions are made by the same people.
It’s also worth noting that many equity codes cap and control what you can charge for tickets, making this conversation beside the point for large numbers of small theater producers.
Would it be better (or worse) if the conversation was not framed around market conditions, or social norms, but around organizational values? (not that we are in a vacuum from market conditions or societal norms)
Perhaps… but I’m not sure whether there’s any clear distinction, at least in my mind, between organizational values and social norms. Can you elaborate?
I’d see social norms as external and organizational values as internal.
I think, technically, your organizational values (as I think you’ve defined them, though I might not be clear on that) are built upon social norms. That is to say, you value the things you value because of how you prefer to interact with/connect to/engage others (and each other)… so the distinction between the two might not be useful.
I may be wrong.
I do think, though, that focusing on organizational values is definitely a way to circumvent arguments about the details of pricing implementations. Values can/should serve as a check on the pricing models we ultimately choose.
I would hesitate to identify either my organization (Portland Center Stage) or Arena Stage’s approach to pricing as “an excuse to jack their ticket prices up.”
To evaluate it that way would be to focus on only one half of the dynamic pricing equation and to ignore our ability to increase the number of accessible ticket prices we’ve been able to offer thanks to not being “stuck” with a price structure that was set at the beginning of a season. Dynamic pricing is about flexibility, not extortion.
But what I’m hearing is more a cultural distinction being made than a financial one- the assertion that no theater, produced at any scale, should cost more than $X for any audience member (regardless of their ability or willingness to pay) is a value statement that crops up regularly in these conversations. It is, in fact, precisely the conversation that started the whole thread about pricing on #2amt.
Where does this (fairly common) moral stance come from? And how do we square it with its most obvious consequence? ie that in the absence of massive contributed revenue subsidies (from the government or private sources) a unilateral policy of “no ticket above $x price” would have to mean “no playwright, director, actor, designer or technician able to create theater as anything other than a hobby subsidized by their own independent wealth or their day job?”
Are we actually arguing for a theater created by trust fund babies and part-time hobbyists, overseen by government and corporate funders (or by a small contingent of generational wealth philanthropists)?
Exactly. And if all the tickets sell out at the accessible price, then patrons are happy because they got a good deal without having to commit to a subscription package, and theatre companies are happy because they’ve filled their houses.
I want to know why people assume that dynamic pricing precludes Student Tickets, Rush Tickets, Empty Seat Passes and other low priced last minute options. Or that the goal is to drive the price as high as the market will allow. From what I understand, no one at Arena expected the demand to drive the price that high.
Thing is, with subscription packages, group rates, full price tickets, last second rush tickets, etc, people have been paying wildly different prices for seats next to one another for decades. Dynamic pricing gives theatres more options for selling more affordable tickets, it give the patrons more options for buying affordable tickets, and it creates a demand for the hot ticket in town. Better yet, it allows theatres to benefit from those lower-price options without resorting to discount clearing houses that take commissions on those sales.
Here’s an idea. You could hold 20% of your house and offer those seats as $20 tickets on the day of the show, for instance. Now, you create a second layer of demand for those tickets as well.
Unless your theatre is 100% subsidized, it still has to operate as a business on some level.
Gotta say, this strikes me (as it had already) as exactly right.
My only exception: I don’t have a problem with the moral stance that says “No ticket should cost more than $X.” I think it’s absolutely fine if a theater decides that it values accessibility for audiences more than compensation for artists.
While I think that’s a fine moral stance, however, it shouldn’t be taken as a moral absolute — one that must apply to all theaters everywhere (or even to most theaters). That strikes me as rigid and inflexible, which is precisely what artists should probably never be.
Gwydion,
That’s a false dichotomy. The choice is not between compensation for artists and ticket prices, unless it’s a strictly for profit production. The Signature in New York sells only $20.00 tickets, they did not cut the budgets of their shows or their artists’ salaries. They just did a good job at fundraising.
If you wanted to make up the difference in salaries (at a large theater, anyway) there are all sorts of non-artist salaries you could look at as well.
As much as I disagree — and I do, though I think there’s room for discussion — I’m not going to respond. I hope you don’t mind terribly. It’s just that my original point in this post was to discuss HOW we talk about pricing, not to talk about pricing. As fruitful as that latter conversation might be, it’s just where my head is at the moment. Thanks.
Gwydion,
Please respond. I really want to read your response to this.
If I can make the time, perhaps, and find the will, I’ll email you my thoughts. Thanks for asking.
If you do find the time, I’d urge you to make it public.
My response is now live in a new post.
Bingo. Who do we want to pay for the art?
If a non-profit is doing pretty much the same shows, for the same prices as for-profit theatre, why do they need a tax exemption (read massive tax subsidy)?
That’s where a lot of the moral stance comes from, I think.
Non-Profits don’t pay taxes on revenue related to their mission and people get tax deductions for giving them money. That’s part of the responsibility of being a 501c3. If an org can’t show how they’re different from for-profit groups the IRS can and has revoked their exemptions.
Hasn’t happened with many arts groups yet, but it should be something to be wary of as the for/non-profit lines become increasingly blurred.
Hey, guys– Sorry to have so little light to shed here as this whole question relates to Arena Stage. I can tell you that it is true that we had no idea the price for ‘every tongue confess’ was going to go this high. AND that we had tickets on sale at much lower prices earlier in the run up. AND that we have kept other ticket programs in place (for example, our regular Southwest night was sold, as usual, at $25 for residents of the neighborhood and tickets purchased as part of the Theater 101 program were purchased at the original price– and these people get access to the rehearsal process as well…) I don’t have any direct discussion around pricing strategies so I can’t really speak to the how, when, or why. But y’all are doing fine without us!
For what it’s worth, it strikes me that the ‘every tongue confess’ ticket price was an aberration — or perhaps “special circumstance” is the right term — given Arena’s history. While I would like to think that the prices we saw didn’t make the show at least somewhat inaccessible, however, I have questions; I’d be reassured to think that some seats were made available at lower prices, through whatever publicized or unpublicized means — particularly given Tony’s concerns.
David, do you think that ends up putting even more pressure on orgs to produce “hits” over the long term?
I know from what I’ve read that that’s been a worry among the field since long before I entered it, and it’s certainly the case among many leaders I’ve talked to.
This is a great question. I do wonder whether there isn’t pressure rather to produce good work, which in turn becomes a “hit” — and if so, whether that isn’t a good thing. But perhaps I misunderstand.
I think the jury is still out on how this impacts the artistic decisionmaking process, frankly. On the one hand, it helps in that we don’t budget for a dynamic pricing boost anymore than one would budget based on 100% capacity. So it’s upside, and upside helps take the pressure off ventures that seem like challenges. The sun shining, making hay, and all that. Most of the time we have fixed seating capacity and fixed run lengths, so we’re boxed in in terms of potential income to hedge against those challenges. With this pricing methodology, there are more tools in the toolbox for capitalizing on upside potential. On the other hand, if we start planning for it, it is no longer upside potential, it is a necessity– and at that point you have to start making more choices with the potential to push the price point upward. We’re just beginning this strategy at Arena so we’re not depending on anything, and hence haven’t started putting that sort of pressure on the selection process.
There is, in general, a drift to greater dependence on “hits” in any organization that is growing more dependent on earned income from production. That pressure is there regardless and is only abated by significant contributed resources or having other revenue streams besides the box office. As to whether having flexibility with the average ticket price will help reduce that dependence or increase it will become evident over time and will be a test of our artistic integrity, I think.
My name is Chad Bauman, and I serve as the Director of Communications at Arena Stage where I supervise marketing, media relations, publications, front of house and sales departments. I have been staying out of this discussion until now. I enter it at this moment only to clarify a few factual matters rather than to add my personal opinion to the debate.
There is a fundamental misunderstanding about how dynamic pricing works. Traditional pricing as practiced by non-profit theaters for decades starts prices at the highest possible level, and when demand doesn’t meet anticipation, strategy has been to discount at the last minute. Dynamic pricing models allow ticket prices to start at the absolute bottom, and only increase to top levels usually when 90% or more of capacity is sold. As such, a majority of tickets are sold at prices significantly less than final price points (usually 40-50% cheaper). This encourages early ticket buying patterns that mimic subscriber behavior.
As pricing at Arena Stage has been an issue that has been raised in several forums by a couple of concerned individuals, I think it is also important to note, as David did, our specially priced tickets which have been made available for all of our shows from day one. Information on those programs can be found here: http://www.arenastage.org/shows-tickets/single-tickets/savings-programs/
For my personal opinion on marketing strategy (pricing, promotion, etc), those can be found on my arts marketing blog located here: http://www.arts-marketing.blogspot.com/. These opinions don’t necessary represent those of Arena Stage, Drexel University or CalArts (the three places where I am employed).
Thank you, Chad.
I think many of us do understand dynamic pricing the way you’ve described it, and we’re generally quite favorably inclined toward it, for exactly the reasons you’ve laid out.
Thank you, too, for reminding us of Arena’s savings programs, which should (I hope) immediately address any concerns anyone might have about accessibility. They certainly address mine, and I’m sorry I didn’t do a quick search of your site to find them myself.
This began as a post about how to talk about pricing, not as a post about pricing itself. Thank you, too, for embodying precisely the sort of clear, bright communication I was calling for.
Gwydion, I’m arriving late to this conversation which is certainly dynamic (much like the pricing conversation it didn’t set out to discuss) and almost heated, which is the part I’m drawn to the most.
The “civil discourse” you’re looking for strikes me as a bit lofty. I am craving a conversation between you and Isaac Butler that drills down to the essence of what each of you believes. Your dissimilar styles of communication are vital to the conversation! To ask anyone to adapt h/her manner of expression, whether on the 2am blog or in the New York Times, neutralizes the conversation instead of advancing it.
Let’s get you and Isaac Butler on a live panel for an authentic conversation (hopefully scrappy at times!) that focusses on content rather than civil discourse. It could be ticket pricing or educational outreach or fill-in-the-blank-with-your-favorite-seemingly-insurmountable-challenge…
Would you be willing to do that? Would he? If so, how can we make it happen?
You know I treasure you, Ann, but I have to say I disagree about the nature of civil discourse. To my mind, we have more than enough sniping and anger and adolescent ranting in American vox populi right now, which is why I’ve been working (not always succeeding, but trying anyway) to avoid it. What we need is the equivalent of a healthy national heart-to-heart, with as much listening as talking, and I’m happy to do that — on the subject of ticket pricing, really, or any other matter — with anyone, anywhere, any time… even Isaac. He may not get this — I may not have made it clear — but I think he’s a smart fellow; I simply have trouble hearing what he has to say, because… well, to speak metaphorically, I’m having more and more trouble hearing at a certain decibel level as I get older. I just don’t have the stomach for it, which is not to say that it isn’t fine for others. My preferred conversational style and his are, I believe, incompatible. Determining the rules of engagement alone would be tough for me. So… I’ll pass, with respect all around.
Gwydion, I agree that the level of “sniping and anger and adolescent ranting” these days is ridiculous. It’s the reality, however (and it’s terrific training for dealing with adolescent kids!)
In my opinion, the best thing about your response is that you and I can disagree and still have a conversation, because we share a sort of genteel manner. However, I encourage you to you develop a stronger stomach for tougher discourse! I’m confident that you would be the better for it, the 2am Theatre crowd would be benefit from it, and though I’ve never met Isaac, I suspect that he would learn something from it too.