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Posts Tagged ‘dynamic pricing’

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Greetings after a bit of a hiatus, and welcome to the 2014-2015 touring season!

Actually, the season pretty much started back in September, so we’re in the thick of it now!

But how did we get to this point? Hundreds of touring engagements will make their way across North America this season, as they do every season. What are the basic mechanics of the business that make that happen year after year? What’s the timeline?

Well, aren’t you glad you found The Road 101, because it is here where you’ll find out how that wholllle process works! A process that is a long, complex, ongoing cycle. There are many places I could begin, but for this post, I am going to begin discussing this cycle with the Tony Awards Nominations as a starting point, which typically take place at the end of April.

There are many types of shows that are out on The Road in a season and it is often a foregone conclusion that many of these will be back out there — the blockbuster, the second and third year tour, the non-Equity tour, the special attraction, and the smaller Off Broadway type show that has built its brand over many years, are just some examples.

Then, there are the new shows coming from Broadway in the current season. So, in this case, we’re talking the 2014-2015 Broadway season. These shows are the touring question marks. Which ones will make it out on The Road in 2016-2017? That’s right. Wrap your head around that for a second so you can follow along. The shows running on Broadway in 2014-2015 are being considered for touring in 2016-2017.

The Broadway 2014-2015 season is still evolving as I write this post, and booking agents (some already representing some of these shows) and presenters are watching closely which Broadway shows will make it through the season and rise to the top. When the Tony nominations come out in April 2015, that is a moment when certain shows could get a key boost, especially those shows nominated for Best Musical. Though agents and presenters are seeing shows throughout the entire season, it is typically during Tony Awards season when many in the industry check out Broadway to see which are most likely to end up being viable touring properties. A lot of this theatre-going happens during the annual Spring Road Conference, which typically takes place between the Tony nominations and the Tony Awards. Now, winning a Tony Award this season does not necessarily guarantee that a show will go out on tour for the 2016-2017 season. There are many factors that a producer and a general manager need to take into consideration before deciding if their show is viable enough for a tour:

  1. Did the show make it through Tony season in good shape both from an awards standpoint and a box office standpoint?
  2. Did the show make a good impression on enough presenters?
  3. Can the show offer a deal that presenters can work with?

Okay, so, the 2015 Tony Awards have happened and we are now in summer 2015. The blockbusters, second year tours and non-Equity tours are largely routed and slotted in for the 2016-2017 touring season. The booking agents are also more clear at this point regarding which of the new 2014-2015 Broadway shows they represent will likely make it out on The Road in 2016-2017, and which will fall by the wayside. The final part of the 2016-2017 touring season programming process is now in full swing as booking agents and presenters work through final deals and tour routing. Again, these interactions happen throughout the year, but it is during the summer and into the early fall where all programming MUST be finalized.

Why must programming be finalized by fall 2015? Because it is at this point that presenters need to then begin figuring out how they want these shows to be priced. It is important to be thoughtful about all the details that go into pricing and to consider all data and history available to maximize profit. If an engagement is not priced and discounted correctly at the outset, there is the chance that the engagement could lose money, or, conversely, it may make money, but if it was underpriced and over-discounted at the outset there is a chance of “leaving money on the table,” meaning even more money could have been made. The opportunity to maximize profit is then further exploited via dynamic pricing.

So, once the presenter decides on the pricing for a show, which includes prices for singles, subscribers and groups, the presenter then sends this pricing to the show’s booking agent for consideration, which oftentimes ends up turning into a back and forth negotiation. Again, multiply this step by many, many engagements that need to go through this detailed process. For a large company like Broadway Across America with numerous markets, the ticket pricing process takes several months to complete. During the pricing process, things move fast and timing is everything, as prices need to be agreed to by the show and the presenter and locked in quickly so the marketing teams can then get to work on creating the brochures, which will include these prices and discounts, and which need to go into the mail to subscribers by certain established deadlines.

The time is now winter of 2015-2016. The 2016-2017 pricing process is beginning to wind down as we move into March. The booking agents and presenters are making any final little programming and deal tweaks to the 2016-2017 season while at the same time are also in the process of booking the 2017-2018 touring season. Meanwhile, as all this is happening, don’t forget, the 2015-2016 engagements are currently out on the road on tour requiring constant management through the end of their tours in May or June, each engagement culminating in its own final bravo – settlement.

And now, it’s Tony Awards season again. Which brings us back to where we started.

Pfew. Did you follow all that? Yeah, I’m still learning to wrap my head around it, too, and I WORK in the business!

In the end, this is just a broad overview of how the booking and pricing cycle works as I have come to understand it. It is likely that others in the industry would have other details to add, but this should give you a pretty good sense of the general timing of it all.

If you have questions, feel free to email me anytime at robin@theroad101.com. If I don’t get back to you immediately, please forgive me. I’m probably swamped in pricing for 2015-2016.

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Well, another fabulous Spring Road Conference is in the books! If you are not familiar with this annual industry conference, check out my posts from previous conferences, such as this one, which will give you a basic overview.

It was a hectic week, filled with a variety of panels, creative conversations, lunches, cocktail parties, networking and shows. What was clear was how far the conference and the commercial theatre industry as whole has come as far as going more digital. The entire program for the conference was available through the Guidebook app and could also be viewed on a pdf. Conference binders were still being distributed, but I have a feeling that by the 2016 conference, the binder option will be gone completely. Also, a number of sessions were dedicated to digital and there was a “Digital War Room” where conference attendees had the opportunity to take advantage of one-on-one sessions with digital pros from various media outlets and social channels, as well as expert media buyers and strategists in the Broadway industry.

There were a multitude of panels on a whole variety of topics. Below is just a sampling of a few sessions…

“’IT’S A GREAT TITLE FOR THE ROAD,’ AND OTHER MYTHS”

This was a jam-packed session that had a lot of vibrant back and forth. Are certain titles right for the Road, but not New York City? Does a tour need a celebrity and what qualifies as a celebrity really as far as someone having enough of a “name” to sell more tickets? Is the summer really not a viable time for tours, or is that one of the many “myths?” There were no hard and fast answers, but it was definitely an airing out of viewpoints and I would say that chances are good that some of discussions will remain in the back of people’s minds when it’s time to think about a possible summer booking, deciding on whether a certain name should be involved, and if a title really will be strong enough to tour.

“WHAT IS THE GP?”

This was another packed and lively session. With the implementation of dynamic pricing, the GP (“Gross Potential”) is no longer the hard and fast largest possible gross for an engagement. People generally felt that the GP was still necessary when making pricing and budgeting decisions, but in this session it became clear that producers and presenters were beginning to become more thoughtful about what this number really represented and considering it a little differently than in the past. No universal approach surfaced during this discussion, but I suspect that in a few years time there will be a more cohesive industry-wide approach on what the GP really means. Perhaps there will be a new definition, as the GP these days seems more like a threshold number that the producer and presenter agree they would like to meet, and exceed.

“THE MILLENNIAL MARKETING MYSTERY”

In this session, guest speak Cathleen Johnson, President of Cathleen Johnson Tourism Consultants, LLC presented data on the “millennial” generation, a generation she insisted we all needed to really pay attention to and understand for the theatre industry to continue to thrive down the road. Johnson pushed the importance of tailoring marketing to attract this newer generation, considered to be an “alpha influencer” in the decision-making process among their peers as well as their parents’ generation. In additional to Johnson, three millennials were also on the panel and they commented on her data. Much of what Johnson said made sense to me, as well as to the millennials on the panel, though, I also felt some of her findings also applied to me and I am definitely NOT a millennial! That said, I think the overarching point was that it was important for marketers of theatre to be aware of the purchasing and social habits of the members of this group when implementing marketing and ticket pricing and discount message strategies.

“MEETING OF THE BROADWAY LEAGUE’S LEGISLATIVE COUNCIL”

This was an exciting and informative session where the panel and several presenters in the audience described recent accomplishments in the political realm, including opposing legislation intended to prevent venues from thwarting deceptive broker practices and advancing tax credits that encourage investment in theatre. These major strides notwithstanding, the big takeaway from this session was how important is is to begin having relationships and dialogue with local, state and federal electeds BEFORE a major issue presents itself, so you don’t have to start from scratch getting these politicians to pay attention to you when a challenge comes up related to your theater or theatre enterprise, and you need them most!

I only touched on a few aspects of the conference here. To really get a feel for this conference and its exciting vibe you must experience it first-hand! If you are a new producer, presenter, marketer, or booking agent looking to learn more about the Broadway and commercial touring industry and to meet the professionals who work in it, I highly recommend that you gain the credentials to join The Broadway League and attend this annual conference. League membership and the conference may seem pricey to some, but if you plan on being in this industry for the long haul, then it’s definitely a worthwhile investment!

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I brought up Dynamic Pricing in other posts. If you need some basic background on the subject, you can check those posts out here and here and here.

Dynamic Pricing will probably be the subject of more of my posts going forward, as more and more producers, performing arts organizations and arts presenters look towards this strategy to try and take as much advantage of their ticket inventory as possible.

If you are a member of Americans for the Arts, there is a FREE webinar on the topic this Monday, Feb 4th at 3:00p EST. For non-members, the cost is $35.00, but if you are not at all familiar with Dynamic Pricing, this webinar could be worth the money — money that you could ideally earn back down the road through Dynamic Pricing!  🙂

Here is a link to info on the webinar:

A Look at the Future of Dynamic Pricing

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Greetings! It’s been a hectic few months in my world between getting temporarily displaced by Hurricane Sandy, along with a writing project heating up, while at the same time earning a promotion! So, I’m a bit behind on my posting.

But I’m back!

And so are dynamic pricing and heat maps. Actually, dynamic pricing and heat maps never left, and, in fact, are likely here to stay, as more and more presenters and producers begin to rely on these capabilities to sell as much of their inventory as possible, and maximize their GP.

I’ve discussed dynamic pricing and heat maps in previous posts. You can check those posts out here, and here. What’s caused me to think about dynamic pricing and heat maps once again is that I’ve become much more immersed in ticket pricing in my new position, and it is becoming clear how dynamic pricing and heat-mapping can be useful tools to help presenters re-think manifests, figure out the smartest way to scale houses, decide when to put certain groupings of tickets on sale, etc.

I recently enjoyed an informative webinar on dynamic pricing, heat maps and patron loyalty that was sponsored by TRG Arts. TRG Arts is a company that provides heat mapping and marketing support culminating in data that helps their clients make more informed decisions about ways to increase revenues and understand who attends their theaters, how to keep them, and how to attract new subscribers.

No need to be a client of TRG to benefit from some of their wisdom. I recommend that you check out the webinar I link to above, as well as subscribe to their blog, Analysis from TRG to keep up on the latest in these areas, and perhaps pick up a few ideas!

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DYNAMIC PRICING:  REVENUE MANAGEMENT STRATEGIES

On Thursday 5/17, the final day of the conference, two sessions were devoted to Dynamic Pricing. (For my previous post about Dynamic Pricing, please click here.)

A lot of information was disseminated by the various panelists on how they have navigated within the Dynamic Pricing model. Below is a list of bullet points that give an overview of the information that was imparted at these sessions:

  • Build different price levels horizontally rather than vertically to fill the orchestra and fronts of other sections to create an electric feeling. People behind these locations will see the energy in front of them, rather than seeing empty seats.
  • Look at pricing by performance, not just overall sales.
  • When you have distressed inventory, align with organizations that can sell these seats at full price to a “valued buyer.” There are companies with a target constituency that may have an easier time getting their consumers to buy the same tickets that you may have trouble moving.
  • Hold back seats to create demand if you know you will sell quickly.
  • Be conscious of the price/value equation. Create a sense of scarcity to spark interest and urgency.
  • Continually monitor and manage rezoning, revenue management and forecasting.
  • When implementing Dynamic Pricing, consider your messaging since prices will fluctuate, i.e. “Prices starting from…” or “Today’s price is…” or “Act now! Prices go up on Friday!” or “Prices are not guaranteed,” etc., so people know the price will change.
  • QUESTION: How can an organization keep up with the messaging, though, if you have limited resources within your advertising spend, and you also don’t want to upset potential customers by over communicating?
  1. ANSWER: Create a seat map that allows people to scroll over seats to see the different prices. “Pick your seats online.” (See Ahmanson Theatre)
  • Price aisle seats higher. People will be willing to buy adjacent seats at the same price when they buy the aisle seat.
  • Set a deadline for subscriber renewal. “Act by x date, otherwise the package goes up to y.”
  • Consider using the word “Adjusting” rather than “Discounting” when messaging that prices are being lowered.
  • Be careful lowering prices for people who already want to attend a performance. People who already don’t want to come probably still won’t want to…even at a lower price. “If people don’t want to come…you can’t stop them!”
  • For one-week markets, do surveys in advance to get a sense of the heat signature.
  • QUESTION: What are some successful strategies when middle-priced inventory isn’t moving?
  1. ANSWER: Raise deeply discounted mid-section seats back to full price, then reduce them and give the inventory to a company like Goldstar. The Goldstar consumer will feel like they’re getting a deal. i.e., they will be getting the full price $75 ticket for $49.
  2. ANSWER: Raise the PL3 price to the PL2 price to give the perception that it’s a hot ticket.
  3. ANSWER: If you have three price levels, for example, $45/$35/$25 and your $35 tickets are not moving, consider raising your $35 ticket to $45 at both peak and non-peak performances with the messaging, “a new block of $45 tickets on sale!”
  • Know your timeline so you are ready in advance to have higher pricing in place before your campaign hits.

Annnnd…this post concludes my coverage of some of the panels and a bit of the fun from the 2012 Spring Road Conference. I hope you found these posts useful, and that you continue to check back here at The Road 101 for more observations, updates, and articles related to the commercial theatre touring industry.

See you down The Road!

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Little by little, Presenters are beginning to adopt “dynamic pricing.” Dynamic pricing allows ticket prices to be fluid based on supply and demand. These days, most theaters still have set ticket prices. If you hypothetically buy an orchestra ticket today for MILLION DOLLAR QUARTET in Pittsburgh, and your friend goes up to the box office during the engagement and buys the seat next to yours the day after the show receives some great press that causes increased demand, the price she pays for her ticket will still be the same as what you paid. In the dynamic pricing scenario, if the great press causes an increase in good word of mouth and a hot demand for tickets, your friend would have to pay more for that same ticket.

And you would have gotten a bargain.

The main challenge with regard to dynamic pricing, though, as I understand it, is getting a handle on the Gross Potential. With fixed ticket prices, you can easily calculate a GP, but with dynamic pricing, since prices could go up or down, and you don’t know if sales will be slack or robust, it seems impossible to accurately determine the maximum gross that can be achieved on an engagement.

Here is a Los Angeles Times article from a few months ago that talks about dynamic pricing and how presenters are considering it more and more to encourage people to buy tickets early, and as a potential tool to build their subscription bases.

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