Dynamic Pricing AND Subscription, not Either/or

I recently had the opportunity to talk with Mike Boehm of the Los Angeles Times about dynamic pricing.  The resulting article highlights the success that L.A. organizations have had using the tactic to increase revenue, while maintaining the accessibility that is a part of most non-profits’ mission.  You can read the article here.  That post, Thomas Cott’s briefing the same day, and the subsequent flurry of online discourse tells me that we, as an industry, are looking at dynamic pricing as something greater than it is.

The tactic – repeat, tactic – of dynamic pricing is but one means to an end – greater ticket revenue.  It is not an end itself – sustainable patronage and revenue.  Since 2002, when my colleagues and I first worked with clients to implement the practice of raising ticket prices after sales were underway, dynamic pricing has been part of an integrated revenue management strategy.  That strategy began with consideration of subscribers and the demand for seats subscribers create. 

Why?  Subscribers have been and – hard as it is to accept these days – still are the foundation of sustainable patronage for performing arts organizations.  

Subscribing is an act of loyalty.  Ask subscribers why they subscribe.  They will tell you – as they have been telling researchers for decades – they love the art form and that they choose to pursue that passion by subscribing to an organization that offers what they love.  It’s a renewable choice and one that sustains ongoing patronage.

Subscribers invest serious money.  They value their passion and are willing to pay for the seats and series that satisfy onstage their attachment to the art form.  We have looked at the data on subscription for hundreds of clients and there’s no dispute:  subscription revenue is the cornerstone of earned income.  Whether subscription represents 10-, 25- or 50% or more of ticket revenue, it’s a fundamental, renewable revenue source that comes in the form of series income as well as associated donations and additional purchases from those very same loyal subscribers. 

Can pricing tactics replace subscription?  Of course not.  Dynamic pricing, for instance, can build short term incremental revenue.  But that tactic on its own cannot build loyalty.  It cannot feed the passion that drives patrons to invest in multiple performances each season, season after season.

Is subscription dead?  No, but plenty of organizations are killing it off by removing it as an option. When organizations make the sale of full renewable subscriptions a central priority, growth occurs as we saw in the success story of Vancouver’s Arts Club Theatre Company.  However, subscription is more apt to die whenever organizations promote it to the wrong prospects, too little, too late, or they stop promoting it all together.  In so doing, these organizations eliminate an irreplaceable means of passion-based demand and investment by arts consumers with lifelong loyalty potential. 

Not everyone is going to be a subscriber, and that’s ok.  The ones who choose to subscribe will be your loyalists, your bread and butter.  And, with the right retention and cultivation strategies, they also can become your advocates, your legacy investors.

Selling subscriptions has never been easy – not since the days almost 40 years ago when Danny Newman first suggested Subscribe Now as the definitive patron call to action.  But, the payoffs are as robust today as ever.  Just recently, we posted on this blog achievements of Vancouver’s Arts Club Theatre Company and Denver’s Colorado Symphony.   Subscription campaigns were at the heart of million dollar increases for each of these organizations.  And, that’s just two of many who are doing subscription right, and growing their institutions in tough times.

To hear more from Arts Club Theatre Company about how subscription AND dynamic pricing helped fuel their $3 million success story, join our free webinar on August 3rd.  Request to register by leaving a comment below or emailing info@trgarts.com.