Crazy Larry's Discount Theatre!

I recently went through a great load of math and spreadsheet jockeying to develop a three-year pricing strategy for the tickets at my theatre. The prices had been based on an old discount system with seniors, etc. getting $2 off the top bracket, and the musicals offered at a $2 premium to the plays. Every three or four years, the income would constrict around the expenses, and the prices would go up across the board by $2.

$2? Where did this magical number come from? Were the folks setting the prices devotees of the brilliant John Cusack film Better Off Dead (which would be an acceptable explanation...)?

Simply put, the discount to seniors, etc. was losing value over time, as was the premium on musicals. The discount rate between price bands and types of show were not only shrinking, their proportions were changing relative to each other. The same thing happened to the season ticket prices, except that the magic number there was $5 - which created all kinds of peculiar incentives and disincentives that had very little correlation to the anecdotal marketing goals at the time.

The pricing strategy we developed is simple, in that it takes into account that between inflation and certain types of steadily increasing costs (such as AEA salary and health benefits) the ticket prices are going to need to go up periodically. This is not a bad thing, and you need to decide for your audience how best to manage it and market it. But to know in advance what your revenue streams will be is critical to creating a proactive management strategy.

Key points of ticket pricing:

• Don't give any one a discount who would pay full price.
• Keep discount values consistent over the years by adjusting them proportionately to current prices.
• Make sure your season ticket prices are creating the same incentives your marketing plan is.
• Offer discounts to potential new patrons on season tickets, not single tickets. Single ticket buyers are often looking for a night out, not a commitment. These folks will often make up the margin on a blockbuster - season tickets are your bread and butter, singles are your gravy. (This can be tough - you're bucking a broad industry trend away from season subs over the last few years.)
  

If anyone is interested, I can furnish you with some of the spreadsheets I developed in the process. The might not solve your math, but they could inspire you to develop a really neat spreadsheet of your own!