Revenue Per Seat-The Master Marketing Metric

Everything I’m about to say applies only to the selling of your live events.

For priorities that go beyond the generation of ticket revenue and the delivering of human beings into your venue to see your shows, see another post.  This one’s not going to address them.

Ok, now that we’re alone, let’s talk.

When it comes to managing your marketing efforts, the metrics you use determine in large part what you see and therefore what you do.  So far from being a neutral window on your world, what you measure can actually change your world, hopefully (but not necessarily) for the better.

The piece I wrote about sold out houses on Broadway reminded me of that, and I want to suggest that everyone in the live entertainment business immediately adopt the following metric as the leading one for evaluating their ticket sales, because it does a lot for you:

Revenue per seat.

And, fortunately, it’s simple.  Just take the total revenue for your show and divide it by the number of available seats.

Notice that I said ‘available’ not ‘sold’ seats.  That’s the key difference.

Why?  Because not doing that can really get you in the weeds.  If, for example, you manage by average ticket price (which the Broadway grosses seem to be based on), you could be deceiving yourself.

Example:  you have a 500 seat house, and you sell 250 tickets for $100 each.  Your average ticket price is $100.  You’re delighted.  Your goal was $95, and you exceeded it.

Meanwhile, the show next door also has a 500 seat house, sells 200 tickets for $100 each and 100 tickets for $75 each.  Their average ticket price is a paltry $91.67.  Yeah, you’re winning!

But are you?  No, you’re not.  Their revenue is $27,750 per show, and yours is just $25,000.  Over a six week run, that difference gets to be tens of thousands of dollars.

Instead, you should be looking at your revenue per seat.  In the first instance, you were selling 250 tickets for $100 each, but you had 500 seats available.  $25,000 in revenue divided by 500 seats equals a revenue per seat of $50.  (Funny how people always forget to add all the zeroes when they do their average price per ticket, isn’t it?)

Meanwhile, your neighbor had $27,500 in revenue on 500 seats for a revenue per seat of $55.  That’s a full ten percent better than you, and if you had been tracking revenue per seat, you’d have known that.

Now let’s look at it differently.  Suppose you’re measuring total revenue (which by the way, is a good thing to measure, as compared to average ticket price, which essentially can often deceive you).  In this scenario, you’re in a 1000 seat house wherein you’re selling 600 tickets at an average price of $55, for a total revenue per show of $33,000.

Your neighbor meanwhile is in a 400 seat house selling 90% of the house at $75 per ticket on average.  His or her revenue per show is just $27,000.  You’re winning, right?

Well, in a way, I suppose you are, but as a marketer, your neighbor is getting a lot more juice per lemon.

Your revenue per seat is $33,000 divided by 1000 seats, or $33, where your neighbor’s is $27,000 divided by 400 seats or $67.50.

Based on that kind of revenue per seat differential, there’s every reason to think that your neighbor’s show could change its pricing a little, move into a bigger house, and still have a higher revenue per seat than your show and close that revenue gap with you very, very quickly.

Which you’d know if you were tracking revenue per seat.

Ultimately, of course, your goal is to get not just maximum occupancy in your house, but maximum financial impact from that occupancy.

The best way to know how you’re doing on that from day to day, week to week, and month to month is with Revenue per Seat as your leading marketing metric.

As I’ve said in the past, I’m happy to present a short seminar on this to groups who might be interested.  Contact us and we’ll try to set it up because it’s so important to the health of the business that it’s well worth the effort to get it figured out.

P.S.-Upon further reflection, average price per ticket sold is not a metric you should discard, but it should never be a terminal metric.  In other words, average price per ticket sold should never be a goal in itself.  It can be helpful in evaluating Revenue per seat, total patron, and total revenue goals, but it shouldn’t be a free-standing goal.