Monday, October 24, 2011

Pricing for Museums is a Demand Issue


My partner and TRG President Jill Robinson has led the development of our firm’s counsel for the museum industry. Recent media and blogosphere buzz about museum admission pricing coincided with Jill’s preparation for upcoming counsel sessions and a webinar on the subject.   In this post, Jill summarizes her insights and adds her voice to the ongoing dialog. She is currently attending the American Museum Membership Conference (AMMC) in Philadelphia and will join me later this week in San Francisco for the ArtsReach Marketing, Development and Ticketing Conference.

October 2012 Update: Jill and I will be doing a webinar on dynamic pricing and its role in patron loyalty strategy on October 31, 2012 at 2 pm EDT. Please register (free) by clicking here.

Photo by Glen Scott via Flickr
Museums aren’t getting useful direction from the recent public dialog about the prices they are charging or want to charge for admission. 

Admission price increases at some of America’s highest profile museums have made news in major media and online, and that coverage has touched off discussion that appears more emotional than productive. It seems like the further away from free or low-cost admission a museum gets, the more the institution is vulnerable to criticism on grounds of not making their collections accessible or affordable. It’s as if admission price is the only way to express accessibility and that accessibility is the only reason for a museum’s being.

Of course, accessibility is important. But, it’s not – and should not be – the sole basis for a museum’s admission price decisions. As Clare Ruud points out, pricing is a mission-based decision.

We agree, and also acknowledge there are diverse missions upon which museums of all genres and sizes are built.  Some are set on a foundation of accessibility – that is, maintaining and preserving a collection that is made available and affordable to the broadest possible segment of the market. Other museum missions are built around visions to share specific themes in education, history, science, or entertainment and include the goal of accessibility.

Then there’s funding. Some museums exist because there is significant public, private, or foundation funding to support and even require free or low-cost admission. Many others, however, need some combination of ticket revenue and contributed income to bring their collections to the public. 

Mission and funding sources are primary considerations to be sure, but all museums have some need to maximize revenue on whatever they charge or earn from admissions – be it ticket price, suggested donation, or annual gift.

That’s why demand must be a baseline consideration for museum pricing strategy – not just admission price setting but also the foundation for membership levels, “always available” discounts, and loyalty programs.  

Demand drives admissions. 

If there is no public demand for the content, schedule, or timing of an exhibit, then not even a free or cheap ticket will get a visitor through a museum’s doors. On the other hand, when demand is high and a marketplace seizes on something they really want to see, admissions – at all price levels – increase.

The art of optimizing revenue from every admission is an integrative not intuitive process.  It considers mission and revenue needs with factors that impact demand. The most critical demand factors vary by market and museum so much as to be totally situational. But, each can be measured using a museum’s admission data and can be projected for sound admission price setting. 

Setting the right admission price – especially a higher price – can be complex but it is not onerous. Many museums resist raising prices because they fear or assume there will be negative public or media outcry. We know from implementing hundreds of arts and culture pricing strategies for clients over the past two decades that price increases are rarely noticed. Do complaints arise? Of course, but generally the public intuitively understands the fact that operating costs increase and price increases follow. This is particularly true for very popular exhibits; they require museums to charge more because it takes more to pay for the care and maintenance associated with large attendance. 

Done right and well, demand-based pricing strategy is a value proposition built for a museum’s market from careful analysis of its audience’s behavior and careful integration of its staff work in a variety of areas, including curatorial, operations, and IT. Such a strategy suits the institution and the marketplace. Important positive outcomes are the result – maximized revenues, strengthened member loyalty, and a community well-served. 

Want to learn more? Register your interest in Jill Robinson’s upcoming webinar on museum pricing.  Leave a comment or contact us.

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