By Jim McCarthy May 19, 2010 0 comments

How Dynamic Do You Want it?

So I have just returned from the Broadway Spring Road Conference in NYC, where I had been invited to join the very first panel of the conference, which was about pricing.

One simple word with so much complexity. A million ways to die, as Bond or a Bond-like character might have said. But I wasn’t alone on the stage, by any means. We had a great group up there, including David Kitto of the Kennedy Center, John Ekeberg from the Denver Center for the Performing Arts (who I hadn’t met previously, but really enjoyed) and Kip Levin, from the Product Development Group at Ticketmaster.

The format was simply that David would introduce the topic and then the audience would ask questions, and I think it worked well. The audience had great, practical, but forward-thinking questions, about the differences between variable pricing and dynamic pricing; the impact of a good house-scaling project; timing on discounting (which of course, I was happy to answer) and others. I think the group had enough knowledge to be able to answer those questions well.

But John raised a question that didn’t (and really couldn’t) get answered in the session: if we move to a world with more dynamism in pricing, do the show producers trust the presenters (people like John who run marketing for a venue rather than for a show that goes through that venue) to adjust prices? How would the approval process work, and if it were too cumbersome, wouldn’t that defeat the whole purpose of the exercise?

Yes, it would defeat the purpose of aggressive dynamic pricing processes.  Make no mistake about it: if there’s a cycle time of more than a few hours between presenters and producers in deciding on and implementing price changes, there’s every chance that these delays would lead to distortions in how the market responded.  Eventually, people would probably abandon the most ambitious aims of a dynamic pricing program and fall back to something much more like variable pricing.

But I don’t presume to have the answer there.  That’s something that producers and presenters will have to figure out, and I don’t think it’s insurmountable.

Still, there’s one message that I think is critical, and I managed to put a decent emphasis on it at the session:  if you’re not measuring and managing revenue per seat, you shouldn’t be messing with dynamic pricing  in the first place.  It could be like giving a chainsaw to a baby.  Because you need to know whether price changes are accretive or not, you need to be measuring revenue per seat to know whether what you’re doing is working.

The other point that I was pleased to hear Rick Lester of TRG support is that a good scaling project is in some ways more straightforward and, based on the scholarship I’ve read, actually has more potential in revenue increases than dynamic pricing for most venues.

Anyway, good panel, good conference, and I hope someone got something out of the discussion.

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