Fast Fact: Admission Pricing is a Science- Not an Art (VIDEO)

Organizations don’t have to guess when it comes to determining an optimal admission price.

Let’s try something new – starting today. I’d like to introduce you to a new project: Know Your Own Bone: Fast Facts for Cultural Executives. Traditional Know Your Own Bone posts will continue to be posted every-other Wednesday. In the weeks between, I will be posting short (around three minutes or less), Fast Facts videos featuring a key takeaway for cultural executives and staff members alike. I hope that you will provide me with feedback, and I am eager to know what you all think! Let’s start here:

Admission pricing is a science. Check out the video to learn why.

 

A deeper dive into data:

Unintentional collusion drives many-an-organization’s pricing strategy, but it’s a bad practice (or, at least a silly one). Today, your organization should be looking at data to inform its optimal price point for admission. Here’s an example of an organization’s data-informed pricing “sweet spot” that data suggest is neither leaving money on the table nor jeopardizing attendance. Every organization has this kind of optimal price point:

Adult Admission Analysis- Aquarium

Your pricing should be contemplative of the attributes of your organization’s high-propensity visitors (jargon translated: it should consider the people who profile as being actually interested in attending your organization). The above example indicates relative price inelasticity between $15.95 and $19.95 – suggesting that as many folks would visit the organization at a $19.95 as they would if the price were $15.95. If this is your organization and you are charging $15.95, you’re not losing visitors – you’re losing revenue that can help keep your doors open and your mission alive.

Different markets, different audiences, and different experiences demand different price points, so I want to emphasize that while this graph is a real example, it’s not necessarily a replicable model for your organization. (Read: I’m not encouraging everyone out there to charge $19.95. I would encourage THIS organization to change $19.95.)

To illustrate, here’s another example of a pricing analysis for a different organization and experience:

Adult admission analysis- performing arts

Finding an organization’s optimal price point has two, basic steps: Collecting data and modeling the data. Optimal pricing is informed by the type of data typically acquired via the conduct of an awareness, attitudes, and usage study that includes price-related metrics and perceptions from visitors and non-visitors alike. From there, price elasticity of demand models aid organizations in quantifying the demand for your experience. If you don’t have the know-how the collect this data on your own or you need help with the models, universities make excellent partners – as do professionals with experience working in this space! The point is: In today’s world – in which data is increasingly available, and more organizations are collecting it – there’s no excuse for blindly following the “leader” or simply guessing when it comes to your organization’s optimal admission price.

 

Words to Know to Be In-the-Know:

 

Unintentional collusion:

Many organizations unknowingly have strategies based upon unintentional collusion. Unintentional collusion is what happens when an organization follows the “leader” thinking the leader knows something that they don’t. Basically, it’s when somebody guesses and other organizations simply copy that guess. When organizations do this, they reaffirm one another’s unscientific strategies.

Value advantaged:

Admission pricing that is set too low and thus “leaves money on the table” for an organization. It is a price point that fails to maximize the data-informed level of revenue that an organization may be able to achieve.

Value disadvantaged:

Admission pricing that is set too high and risks jeopardizing attendance. It is a price point that fails to inspire visitation among those who profile as likely visitors because the high cost to attend poses a barrier to engagement.

Let’s stop guessing when it comes to admission pricing. Today, pricing is not an art. It’s a science.

 

I hope that these Fast Fact videos will provide thought-fuel for your organization! Please let me know if you have thoughts or feedback so that I may evolve these videos to be most helpful over time.  The next short video will be posted on August 19th.

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Posted on by Colleen Dilenschneider in Community Engagement, Fast Facts Video, Financial Solvency, IMPACTS Data, Myth Busting, Sector Evolution 8 Comments

About the author

Colleen Dilenschneider

MPA. Chief Market Engagement Officer at IMPACTS Research & Development. Nonprofit marketer, Generation Y museum, zoo & aquarium writer/speaker, web engagement geek, data nerd, marathoner, nomad, herbivore

8 Responses to Fast Fact: Admission Pricing is a Science- Not an Art (VIDEO)

  1. Maylon White

    I like the video format. Thank you very much.

     
    • colleendilen

      Thanks for watching and for your feedback on this first one, Maylon. I am thrilled to hear that you like the format!

       
  2. Michael Dowling

    Great job on the first video! Congrats. Nice use of graphics to tell the pricing story. Also, helped a lot to have the written analysis alongside the video. Thanks!

     
    • colleendilen

      Thanks so much, Michael! I appreciate the feedback about the written analysis around key points. Very helpful. Thanks for watching!

       
  3. Nick Moreau

    Amazing first video! (Subscribed.)

    Do you do the conference circuit? I’ve only been to one conference for arts marketing, but wow, you really would have blown most of the speakers out of the water.

     
    • colleendilen

      Thanks for your kind words and also for subscribing, Nick! I’ll be speaking at MuseumNext in Indianapolis on September 26, 2015 among a great group of thinkers and presenters. Here’s a link to the conference. Thanks again for watching and reading!

       
  4. Steven Schindler

    Great to “hear” from you on how data should inform admission pricing – thank you for making this understandable and actionable. In the institutions I’ve been privileged to help lead, aligning member pricing with admissions optimized revenue and retention. Would love to hear from you on this!

     
    • Colleen Dilenschneider

      Miss seeing you, Steve! Thanks for the comment. I am working with IMPACTS to see what I can share by way of membership pricing and opportunities. It’s coming down the pipeline! Thanks so much for the recommendation and I’ll see what I can do to move that higher up on the list.

       

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