Arts Groups Mimic Airlines in Pricing – Can that be Good?

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July 6, 2011; Source: Los Angeles Times | In Los Angeles, a few major arts organizations are trying on the concept of “dynamic pricing,”  taking a page from the airline industry where two people can buy identical seats for vastly different sums. Essentially the way this works is that a ticket may start out at $120 but if sales are brisk the price may escalate the longer you wait. If, on the other hand, the public is relatively unexcited about the offering, the seat next to you may go for a fraction of what you originally paid.

Early nonprofit adopters of the practice are Seattle’s Pacific Northwest Ballet and the Chicago Symphony. The Center Theater Group, which is employing the strategy in L.A., estimated that the strategy boosted their proceeds for a recent production by $1.5 million.

The description in the article sounds a little like the “Who Wants to be a Millionaire?” television game show: “In the most sophisticated versions, the price fluctuations are guided by computers programmed to constantly sift sales data compiled from online and telephone purchases. Algorithms are applied to information on how fast each seat is selling, compared to past norms. The result can be a parade of price revisions from the day tickets first go on sale until the last curtain falls.”

The nonprofit arts groups interviewed for this article said that they do save some seats at affordable prices even for the most popular show, and the article suggests that the situation works out for all by hitting up high rollers to subsidize the less-monied ticket buyers.

Apparently the strategy has gained receptivity among nonprofit arts groups since the start of the recession. One Colorado-based consultant says he has seen a 24 percent increase in ticket proceeds among the groups he works with which have adopted the practice. Some groups quoted here consider the practice unethical. What do you think? —Ruth McCambridge

  • ray horton

    By what theory can a management strategy that puts more fannies into the seats for performances of nonprofit arts groups be labeled unethical? Wake up and smell the roses. This is the second decade of the 21st century, hardly a time when nonprofits can hide behind the skirts of some theory of justice.

  • Harvey Newman

    Can this concept be applied to government or health services? Prices vary depending on need. Providing discounts at times of low demand. Is anybody in these fields trying dynamic pricing?

  • Howard Freeman

    I agree with Ray. Also, I wonder if this could be applied to special events, with tickets increasing in price the closer you get to the event date and the more attractive the event appears because of some draw of value (celebrity, experience, etc.).

  • Steven Roth

    My company, The Pricing institute, did some of the work with the Center Theatre Group. And yes, dynamic pricing can be applied to special events and holiday shows. It can also be applied in strategically lowering prices as well.

  • Amelia Northrup

    Thanks for this thought-provoking post. Rick Lester of TRG Arts, where I work, is the Colorado-based consultant referenced in this article; we have pioneering efforts in dynamic pricing for nearly ten years. We