This article was passed on to us from a Situation Room subscriber {thank you Matt}.
The issue is revenue management and it has long been argued that the theatre world needs to embrace the airline ticketing model. Well, Christophe Imbert from software company Sabre Airline Solutions and Tim Baker of arts consultancy practice Baker-Richards addressed this issue at a recent conference.
"Tim Baker argued that airline tickets had only a simple utility value – a means to an end – and by advertising their lack of frills, lowest prices, and basic point-to-point service, the low cost airlines had in effect reduced the value associated with the experience. Whereas performing arts tickets were all about the value of the whole event as an experience – the end in itself; even with low ticket prices, people had to value the event enough to buy the tickets. The airline model is primarily based on differentiating price by time of booking, and a completely different approach is needed for the cultural sector.
What cultural organizations need to do is identify which of the other price differentiators (performance type / timing, concession group, seat location, service level, as well as transaction time) were most motivating for their customers and design an approach to revenue management that worked in their circumstance. For example, from Broadway to the Royal Shakespeare Theatre, customers are willing to pay for premium seats, generating very significant additional income. In a sense, theatres have been using ‘revenue management' techniques for decades – standby, early bird, discount quotas, peak performance pricing, etc. and the opportunity now is to be more scientific about how they are applied."
Amen.
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