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Broadway Discounts Gone Wild

POSTED BY Damian Bazadona 22 February 2011 16 Comments

So, who actually pays full price for Broadway tickets anymore?  I asked our friends at Telecharge some pretty straight forward questions about the use of discount codes on their ticketing system.  The information we received may surprise you.

First, I asked them “for tickets sold to musicals in 2010, how many of those that used a discount code to purchase a Broadway ticket were ‘new Broadway ticket buyers’ versus those that have purchased tickets in the past?

The answer?

  • 43% of “new to file” (which I would call “new to Broadway”) NY metro area musical buyers used a discount marketing code to purchase tickets.
  • 29% of “new to file” out of town musical buyers used a discount marketing code to purchase tickets.

Remember this doesn’t include TKTS, groups, rush or any other “non coded” discount outlets.

Now, that’s musicals – how about plays?

  • 40% of “new to file” metro area play goers used a discount marketing code to purchase tickets.
  • 29% of “new to file” out of town play goers used a discount marketing code to purchase tickets.

You can draw your own interpretation of this data but, to me, this data underscores the need for a discussion on a few key questions.

Question #1:  Should we be using a price promotion as the primary driver in reaching out to new audiences for Broadway? Even though we think we are putting discount offers in front of those that are “in the know” through targeted discount emails, this data clearly highlights that they end up going to a much wider audience well beyond your control.  Simply Google a show name and you’ll see what I mean – there are a range of discount offers being presented to those that are probably more than willing to pay full price if the discount wasn’t available.  Aside from the revenue lost on that particular transaction, I have a bigger concern – if you’re new to Broadway and are presented with a discount code, you are then officially trained on how to NOT buy a full price ticket.  With no direct association with price to value and with 50% discounts in the market, why would we ever expect behavior NOT to repeat itself with these buyers who have been introduced to Broadway through a price incentive?

Question #2:  Should our pricing promotion be the same for those that attend Broadway regularly versus someone who is new to Broadway? Again, with upwards of 43% of those “new to file” using a discount code, we are not truly distinguishing price to value between the two audiences.  What does that say for the way we value customer loyalty as a category as someone who attends regularly may well be paying more for the same ticket if a newbie has a better grip on how to use Google to find a better promotional code?  “But, hey, it’s how the airlines do it?” – this is one of the most common points I here and I have a major issue on this analogy on many fronts.  First, airlines don’t publish the rack rate – we do, right on the front of the theatre and on our website.  Second, they invest heavily in their infrastructure to maintain a variable pricing model which we currently are not structured for.  And, third, do we really want to aspire to be like the airlines?

Question #3:  How much higher can our top ticket price go in order to subsidize the expansion of deepening discount offers? You can now get a better discount online than waiting in line at the TKTS booth.  That’s a radical shift from where we were five years ago.  So, with all data pointing to more and more tourists accessing discounts codes, who will be the “full price” buyer?

Question #4:  Are the “new to file” customers truly building blocks for the future? In other words, are we inviting new audiences to Broadway through these price promotions that really need a discount offer in order for them to actually make it to Broadway (i.e., college students, young professionals, etc.)?

The answers to these questions are not simple to address.  I do know that many of our clients are trying to get ahead of the curve with how they are rolling out pricing promotions, setting price points and defining buying parameters and I’ve seen some great examples that have had a solid impact on their bottom line.

What really concerns me in the short-term is the overarching spirit of the economic climate that is fueling fear at all levels and it’s having an impact on all industries – not just Broadway.  Just look at the news – unemployment, entitlement reform, rising consumer prices and international uncertainty.  It’s scary to be on either side right now – consumer or entrepreneur (a producer).  This is at the very root of why price driven promotional outlets (i.e., groupon, living social, retailmenot, etc.) have blossomed during these past few years tapping into a universal fear that is often massaged by attribution shown through promotional offers (i.e., “Look, 50 tickets were sold with this special offer.”).  But, we all know (and history has shown it) – competing on price isn’t a winning long-term strategy.

Here’s to 2011 – the year, where whether we like it or not, we finally address ticket pricing strategies for a digital age.  I look forward to the rounds of discussions we will ultimately have on the topic.  Thanks to the folks at Shubert Ticketing for helping pull this data.

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16 Comments »

  • TheMayoress said:

    I attended a Broadway marketing seminar a couple months ago and was embarrassed that half the conversation – led by NYC’s top theater marketers – was where to find discount audiences, how to paper the house, etc. Sticking a band-aid on a larger problem. Fix the model and the tickets will follow.

  • Damian Bazadona (author) said:

    Thanks for the response TheMayoress. I’m pushing for a platform where we move to a place that matches price with value which I believe is on the horizon. Optimism!

    d

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  • Gil said:

    Interesting point.

    My in-laws had two pieces of Broadway mail last time I visited them. Both were announcing new Broadway shows and both were announcing preview ticket discounts before even explaining the shows. It’s putting the discount before the horse.

  • Tim said:

    Year ago, David Merrick warned against creating a half-priced (now known as TKTS …) booth precisely because he thought it would create upward pressure on already-high list prices. People in the regular retail goods world point out that every time Americans have been offered a choice between service (or warranties, or buying-American, or anything else) and price, they have always, always chosen PRICE. I would say that Broadway (and many N.F.P.) producers are not facing a crisis they brought on themselves, but a law of economics. The wider a net you spread for new customers, the more heterogeneous your client pool is, the more regular laws of supply and demand will apply. Maybe those laws should be studied, instead of fantasizing about getting imaginary full prices.

  • Damian Bazadona (author) said:

    Thanks Tim for the response – well said. I know many who agree with that view in one way or another. I think many producers feel they don’t have the tools that are needed (i.e., technology, etc.) to really utilize a variable pricing strategy which I wouldn’t necessarily disagree with. It’s such an interesting topic to me and one that will be interesting to watch over the coming years both as a consumer and an entertainment marketing professional.

    Appreciate you taking the time to read the article and the feedback.

  • Do you pay full price for Broadway shows? Then who does? | The Content Beast said:

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  • Alex said:

    Only rich people can pay full price. And they pay premium prices for the best seats.

    The only way the middle class (because let’s face it the poor can’t afford to go) can afford tickets is by discounts, which have become the “real prices” The full price is not even a factor except it’s the “what the discount is figured from” so the real price of tickets (discounted) for Broadway are between 69-85. Which is still a lot for two hours of entertainment.

    I understand why it costs so much, everyone needs to make a living (actors, producers, theater owners, writers, composers etc) but the cost of Broadway (and now off-broadway) has turned it into “special occasion” event for families and couples. I’m single and go with friends, but even I try and take clients so my expense account covers it. I couldn’t afford to go hardly ever if it weren’t for that.

    Full priced Broadway is only for the well heeled. The discounts are the real prices and that’s what the vast majority of people especially since the internet made it easy, will and can pay. If it weren’t discounted none of us could go. Or would go very very seldom, and then only for something we were sure would be great.

    I went to see American Idiot – I already know I don’t really like Green Day, I just wanted to see the show to see the directing (which was great) and the performances — but the music isn’t really my thing. If it hadn’t been discounted I wouldn’t have gone, but I try and see everything — so I sat on purpose up in the gods for around 60 (at TKTS). If I had to pay full price for the gods (which with all the fees would have been 80 something) I wouldn’t have gone at all. I’d much rather have paid around 30-40 to sit in the gods. That’s what I feel that show in those seats is worth. But it doesn’t work that way.

    I think everyone knows to buy on the internet and several services send me emails constantly for shows not even open yet. Broadway is too expensive at full price for normal people. There is no “new audience’ for Broadway — it’s the same people that have always liked it — people in New Jersey, Cultured people in New York and Theater people (talk to people who sit near you at shows and you’ll find out) –plus theater tourists — theater people who are tourists. They are actors, directors, playwrights and teachers of theater from other cities, not random tourists — theater tourists. None of them make enough money for full price.
    There is no way to gather a “new audience” except the way Disney does it — market to kids. Maybe, just maybe their parents can afford full price.
    Thanks

  • Joey LaChimia said:

    I totally agree with Alex. The “full price” ticket is a theoretical concept. only the wealthy and those with client expense accounts are buying those seats. Everyone else… well, we go to theatremania, NYTimes TicketWatch, BroadwayBox, and get very attractive discounts that make these shows available and affordable to the masses.
    I love the theatre— and have had some great times at great shows…. but are any of these “worth” or “valued at” $85, $95, or even $135 ???
    I don’t think so.

  • Chuck said:

    Alex and Joey – have it right. Discount prices are and should continue to be the real price. My wife and I are both lovers of theater, musicals, dramas, on and off broadway and we are both retired. If we had to pay the full inflated price we would not go or we certainly would only for the few real critically reviewed shows to get some value for our money. with discounted pricing we go more often and are more willing to try the newer productions. Producers must begin to realize the there is an upper limit to pricing their entertainment. There is just so much that individuals can afford unless they have a great deal of disposal income and the majority of us fall in the middle!

  • Damian Bazadona (author) said:

    Appreciate all of the responses and feedback.

  • Tom said:

    We’re a new professional theatre company just entering our fourth season, so we don’t have much of a track record to draw upon. Our first season we were a huge hit with a production of HAIR. We didn’t sell any discounted tickets. we were in a non-traditional performance space and since it was our first show we didn’t have a seating chart when tickets first went on sale so we had to sell general admission seats. If people wanted to pay an extra $15 they could get a premium seat. We kept expanding the premium seating area based on demand until it was on the average 70% of the house or more.

    Then we entered our second season and the economy bottomed out and there we were with a holiday show we couldn’t sell tickets to. We had great reviews and great press with tons of advertising. So we in a panic tried every discount promo we could. To get through the season our discounts went up and down and all over the place and the closer to each production the greater the discounts got. I didn’t like pricing tickets that way because it felt like we were awarding people if they waited to buy tickets but we were desperate.

    Then I did a lot a ticket buying/selling research and started hearing a lot about dynamic ticket pricing. In our third year I thought we should give it a shot but also realized it may take a few years to “train” our audience.

    So here’s how we set it up: We published our ticket guidelines which included a series of dates that allowed you to purchase season subscriptions at greater discounts the earlier you placed your order. Additionally single ticket prices went up once the house for any given performance reached 60% and again 24 hours before each curtain. We never wavered on the published plan and sold more subscriptions and single tickets earlier than the previous season.

    This year as we head into our fourth season (our first show is in May) we e-mailed all of our prior subscribers, donors and members (you must be a member to get discounts to subscriptions and to single tickets)a private pre-sale offer for subscriptions at a great rate before going on sale at the next lower discount rate to the general public. Our pre-sale ends this Tuesday and so far we have sold more than double the number of subscriptions we sold last year.

    As the season plays out we’ll see how well our dynamic ticket sales go but we expect great results with higher than before advance sales. We also hope with sales as we get closer to the shows that our average ticket price will also increase.

    I truly do believe that the key to discounting is to do it as an award for advance purchasing. I think TKTS trains people to wait until the last minute…that’s how I buy tickets. (or my friends comp me in:)

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  • Alex Carney said:

    Seems to me any pricing model has to take into account bargain hunters and those willing to pay top dollar. That’s how any market works — and Broadway is a market. It’s the agora of entertainment. We don’t really train the audience, we respond to their needs. If we can’t make it work economically, we don’t do the project or we close. It’s that simple. Let me be clear; one should do everything in one’s power to keep a show going or to get it on but if you can’t make the numbers work, you can’t do the show. Theater insiders know that the breakeven number is a theoretical number developed based on full prices. The break even number can (and will, given current market conditions) be hit using a combination of full, discount, and premium pricing for seats. What ultimately matters is does the show make money consistently. That’s what investors want to see.

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