Empowering Cultural Institutions with Real-Time Pricing Strategies.
At the beginning of August, Hungary’s leading stand-up comedy theatre, Dumaszínház, launched a dynamic ticket pricing pilot. Interticket’s ticketing system was combined with DynamO Pricing’s pricing engine to create a simple-to-use, yet highly configurable pricing and sales framework that enables near real-time pricing.
After the feature had been tested, the tickets for more than 60 events that were either just being announced or going on sale had their prices set using DynamO's pricing engine. On August 20, there were major events, as well as smaller-scale ongoing performances at both rural and urban settings.
“Dynamic pricing is expected to provide a data-driven pricing strategy as a secure starting point in a subjective genre. It is the only way to respond to the ongoing challenges that the performing arts have faced over the last two years” says Gergely Litkai, founder of Dumaszínház.
The pilot period at Dumaszínház lasted only until the beginning of September, during which time more than 5,000 dynamically priced tickets were sold. The results were so convincing that the theatre management decided to use this automated solution to advertise all their new events, including the entire autumn/winter season, on a demand basis.
Nevertheless in addition to the comedy genre, DynamO's service is also available to other cultural operators. Dynamic pricing was recently implemented by Müpa Budapest, one of the most well-known cultural brands and most cutting-edge cultural organizations in Hungary.
“The last few challenging years have also fundamentally reshaped consumer habits in the cultural sector, and the global changes ahead are likely to have a major impact on the arts and the functioning of cultural institutions, in which sustainability will play an increasingly important role. So technology is also helping to ensure that the pricing of art content responds in real time to the needs and opportunities of customers” said Gábor Kosztolánczy, Deputy CEO of Müpa Budapest.
First of all, eight performances of Recirquel’s highly successful Solus Amor were advertised with demand-based pricing, as reported by several professional portals, including Papageno and ArtNews. In the future,it is expected that more performances will be priced using the new adaptive solution, and that more and more actors, not only cultural ones, will start using pricing software.
“I’m too busy to implement a complex new pricing tool”
With modern software and data analytics tools, dynamic pricing is accessible to any team, however busy, thanks to automation. DynamO developed a very straightforward and easy-to-use interface and provides free support and assistance. Setting up the dynamic pricing parameters for a typical theatre performance (3-5 different ticket categories) takes 2-5 minutes for our clients. Even very small theatres and music groups with only 1 person managing ticketing are achieving great results using DynamO.
“We have lots of one-night shows and we don’t have autonomy on price-setting (we have to set prices in line with promoters / producers), so dynamic pricing can’t work for us”
Dynamic pricing can be applied to a wide range of events, including one-time performances, festivals, sports events, and more. Predicting the success of a one-time event can be very tricky as success depends on multiple variables: big names, promotion partners etc. However, dynamic pricing actually helps to mitigate the risk associated with one-off shows or short runs. Over time it becomes a highly effective tool to support performance lifecycle evaluation and decision-making.
When first implementing dynamic pricing you can talk to your partners about whether they want to do it or not, and if not you don’t have to dynamically price their shows. Once you have dynamically priced a few shows you can show them the data to evidence the potential ROI they are missing out on and they will likely choose to participate, as we’ve seen with numerous clients in this position.
“If the prices are always changing how can I forecast accurately?”
Forecasting is always an educated guess about the future. With dynamic pricing, forecasting is actually more reliable than with fixed / static pricing, because it reacts to market fluctuations and generates additional yield on popular shows while boosting audiences at less popular performances / events. Ticketing managers can predict based on their past experience as they usually would. The only change they need to make is that they should expect better results both in revenue and tickets sold than ever before. A typical DynamO client generates 14-17% average revenue growth while reducing unsold inventory by over 20%.
“We often have to paper / discount heavily at the last minute to fill a show, dynamic pricing will only exacerbate this late booking behavior - we want to encourage early bookers!”
Dynamic pricing can help encourage early booking and aid in avoiding last minute discounts to fill an event. In many cases prices increase as the event date approaches and availability decreases. There are many logics that can be applied in dynamic pricing and it’s never guaranteed that tickets will be cheapest at the beginning of the sales period, or at the end of it, or anytime in between! While it can provide a kind of gamification opportunity to ticket buyers, there is not a simple and consistent rule that they can follow. With dynamic pricing they can’t just wait and be guaranteed a cheap ticket.
“As a not-for-profit organization, I don’t think it’s a good fit - dynamic pricing is designed for profit-making companies.”
All kinds of cultural institutions can benefit from dynamic pricing. Optimizing ticket sales allows you to break down cost barriers across your programming and reach a wider audience, while ensuring financial sustainability. Dynamic pricing strengthens any mission-focused organization’s pricing strategy. It can result in wider availability of cheaper tickets and longer periods of availability for high-demand performances. Organizations such as the Hungarian State Opera, Operetta Theatre, and Palace of Arts have demonstrated how beneficial this approach can be. With the additional revenue generated, these institutions can further improve service quality and invest more in their artists, creating a positive social impact.
“Ticket buyers don’t want another layer confusing them - it’ll stop them from completing their purchase”
“Dynamic pricing is only for profit driven organizations. It won’t help us reach new audiences or build lasting relationships with our communities.”
Arts organizations need income in order to operate and bring their unique value to audiences and communities. Historically in the UK this has been generated through a combination of national or local government funding, philanthropic giving and earned income (i.e ticket sales). With a 16% real terms cut in arts funding since 2017, the shortfall needs to be picked up for the cultural sector to continue doing their vital work. Philanthropy in the UK is not as strong as in North America and although it has trended upwards since 2018 evidence shows that we can’t rely on this. The area where organizations have most control is their earned income.
Maximizing this is fundamental to survival.
Increasing ticket revenue supports all organizational goals whether that is better-paid artists and staff, higher production values or more community and outreach work. Without financial stability, organizations and the value they bring for their communities is at risk.
“Dynamic pricing isn’t good for audiences, they won’t respond well…”
Anna Hetényi, Head of Ticketing at Müpa (Palace of Arts), shared her experience with combining dynamic pricing and their established loyalty program:
"DynamO implemented their dynamic pricing solution with maximum flexibility, fully accommodating our specific needs at Müpa. They seamlessly integrated their system with our well-established loyalty program, allowing us to preserve its benefits for our loyal customers. For instance, during our pre-sale periods, we offer tickets at fixed prices, and once these periods end, we switch to dynamic pricing. This approach has enabled us to maintain customer satisfaction while optimizing our revenue through a tailored and adaptable pricing strategy."
“Dynamic pricing is just about increasing prices, it’s not fair on the audience”
In contrast to the belief that dynamic pricing simply increases ticket prices and locks out some audiences, it can be the key to understanding the true market value of your ticket inventory, and being able to price strategically. As part of a well-rounded pricing strategy, you can maximize ticket revenue and make tickets available to the widest possible audience at the same time.
Recently, the highly anticipated reunion tour of the iconic UK band Oasis has captured the attention of music fans worldwide. With the buzz surrounding their return, the demand for tickets has been through the roof. Unfortunately, the ticketing experience has left many fans more than disheartened, thanks to an avoidable problematic implementation of dynamic pricing.
The crux of the issue lies in the use of dynamic pricing, a strategy where ticket prices fluctuate based on demand. While this approach is often beneficial in optimizing revenue, it can also lead to significant consumer frustration if not executed properly.
Lack of Communication: The promoter and ticketing company failed to adequately inform customers about the use of dynamic pricing. Fans were caught off guard when they encountered unexpectedly high prices—up to £350 for a ticket that started at £150. This lack of transparency eroded trust and led to widespread dissatisfaction.
Long Queue Times: The combination of massive demand and dynamic pricing created extraordinarily long waits in online ticket queues. Fans were frustrated by the extended periods spent waiting, only to be shocked by inflated prices once they reached the front of the line.
This shock quickly tuned into heightened stress caused by a checkout timer presenting people with just a handful of minutes to decide if they wanted to pay significantly higher prices for their tickets - and with it significantly higher fees charged by the ticketing company.
Failure to Manage Expectations: Without clear communication and proper management of expectations, the dynamic pricing model became a source of discontent rather than an effective tool for managing demand and increasing revenue.
These issues stemmed from a failure to follow essential procedures and protocols when implementing dynamic pricing:
Defining Objectives: Understanding the objective behind dynamic pricing is crucial. Is it to maximize revenue, manage demand, or both? In the case of the Oasis tour, it seems this objective was not clearly communicated or managed effectively.
Assessing Suitability: Dynamic pricing should be chosen only if it aligns with the goals of the event and the expectations of the audience. For high-demand events like the Oasis tour, it’s vital to work out if dynamic pricing is the right tool for the job.
Setting Base Prices and Parameters: Establishing a fair starting price and appropriate parameters for price fluctuations is essential. If the base price is set too high or the range of price changes is too extreme, it can lead to consumer shock and dissatisfaction.
Effective Communication: Transparency is key. Clear communication about how dynamic pricing works, including potential price changes and queue expectations, can prevent misunderstandings and build trust.
Terms and Conditions: Comprehensive and clear terms and conditions help set expectations and provide consumers with necessary information about pricing changes and ticket availability.
Ethical Considerations: Ensuring that pricing practices adhere to ethical standards and consumer protection rules is vital. This includes avoiding exploitative pricing strategies and ensuring that the process is fair for all customers.
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When done correctly, dynamic pricing can be a powerful tool. Imagine it like a skilled chef adjusting the seasoning of a dish based on the taste of the diners. If the chef understands their ingredients and the preferences of their guests, they can create a balanced, enjoyable meal. Similarly, dynamic pricing, when implemented with precision and care, can meet both business objectives and consumer expectations effectively.
The Oasis ticketing debacle highlights the importance of following proper procedures when using dynamic pricing. By defining clear objectives, communicating transparently, setting appropriate prices, and adhering to ethical standards, dynamic pricing can be a valuable asset rather than a source of frustration.
You would think and hope that the promoter and the ticketing company for the Oasis tour would have these procedures and protocols in place. Oasis themselves are distancing themselves from who was to blame and the promoter and the ticketing company are pointing fingers at each other. Perhaps it was all a mistake. Perhaps they all knew what was going on. I'll let you decide.
No Oasis lyrics were used in the creation of this article.
