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Distraction: Blaming Admission Cost for Cultural Center Attendance (DATA)

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admission pricing

Distraction: Blaming Admission Cost for Cultural Center Attendance (DATA)

Yes, it’s nice to get things for free – but it’s not why people aren’t visiting cultural organizations.

This week’s KYOB Fast Facts video is a bit of an experiment for the Fast Facts series. It’s a kind of IMPACTS “data attack” regarding cost as the primary barrier to visitation for cultural organizations. I’ve left out some of the more well-known economics that indicate that admission is not a primary barrier to visitation, and kept this to IMPACTS data.

This post does not say that cost is never a primary barrier, but rather that the true behaviors of the market indicate that our treating cost as the “go to” barrier may be serving as a self-sacrificing distraction. This post also does not suggest that access programs for low-income audiences are not important, but rather that they are a totally different thing than admission price. (Got it? Good.)

Simply put, stable cultural organizations have three, general means of access: 1) A data-based admission price based on what the market can and will pay to visit them; 2) Targeted (key word) access programs to allow for visitation of specific audiences without means to pay admission; and 3) Affinity-based programs (i.e. membership or donor societies) to engage and cultivate key supporters.

Access programs that reach low-income audiences are often central to an organization’s mission (or grant funding opportunities), and they are important. However, admission price is not an affordable access program. 

When cultural organizations convince themselves that cost is the primary barrier to visitation for likely visitors, we miss out on opportunities to remove the actual barriers to visitation that are keeping people from coming through our doors. Barriers to visitation that are generally more significant than cost include items such as schedule, negative attitude affinities (“Not for someone like me”), reputation misses, and simply lack of content interest/preferring another activity (as we’ll discuss below). This data is important for those organizations that avoid tackling true barriers by making sacrificial assumptions that “if we build it (or create this program) and make it free, they will come.”

Can admission price be too high? You bet. But it’s just not the primary barrier to entry that we keep on defensively thinking that it is within the industry. While it’s often easier to blame pricing than to examine more deeply-rooted issues for lack of sky-high engagement, it’s often a shortcut to even less earned revenue and a devalued brand.  I’ve written about this data and more in this post (Admission Price is Not a Primary Barrier for Cultural Center Visitation) and in this post (How Free Admission Really Affects Museum Attendance). There’s enough information on this topic to fill a dozen videos, but let’s power through some basics:

 

1) Time is more valuable than money

First, both high-propensity visitors and the composite market report that their time is more valuable than their money. A bigger barrier to visitation, then, is being considered worthy of someone’s time. If cost were the biggest barrier, these bars might be reversed. This finding is not surprising at all, as cost generally pales in comparison to schedule and reputation when it comes to factors influencing discretionary leisure activities.

When we blame admission price first, we are building this assumption on a simple fallacy: that one’s money is the most valuable thing that cultural organizations are asking for. Cultural organizations are asking for visitors’ time – and that’s often a more important thing to them than money.

 

2) Free admission does not significantly affect intent to visit

(And to the extent that it does, it’s the opposite of the “free is best” assumption.) If free admission were a cure-all for engagement, then folks would have higher intent to visit those organizations. Those would be the organizations that they want to and plan to visit! This is not the case. In fact, in most instances, audiences indicate greater intentions to visit organizations that charge more than $20 rather than those that are free.

I’m certainly not suggesting a specific admission price, but this data does fly in the face of arguments suggesting that people might not want to visit an organization that charges admission simply because it charges admission. It’s often the opposite. The popular tenant of pricing psychology is true: people value what they pay for. Organizations that offer free admission often unwittingly devalue their brands, and without a best-in-class reputation to afford wiggle room, their public perceptions often take a a bit of a pricing psychology hit.

 

 

3) Cultural organizations are generally perceived as worthy of their admission price

Organizations charging admission have similar value for cost perceptions as other activities. This data – like most data that I make accessible here on KYOB – is from IMPACTS and the National Awareness, Attitudes, and Usage Study. Sometimes it seems that professionals within cultural organizations have an inferiority complex when it comes to comparing their experiences to others. (Although, yes, there are plenty of museum professionals on the other side of the spectrum and that’s a problem, too.) But the idea that cultural organizations might be less worthy of having an admission basis than other activities is make believe. In fact, in many cases, cultural organizations are considered even more worthy of their admission price – when they have one- than a baseball game, football game, basketball game, or a rock concert. We really do, generally, give visitors bang for their buck.

 

4) People value what they pay for

This chart shows the overall satisfaction levels of visitors to paid vs. free admission organizations. It includes classical concerts, live theater, history museums, art museums, zoos, aquariums, and science museums. Notice anything? It’s true. People value what they pay for.

 

5) Admission pricing is not the primary barrier to visitation for those with interest

Finally, for folks interested in visiting cultural organizations but who haven’t in the last two years, cost is the 14th ranked reason why they haven’t visited. The top reasons are preferring another kind of activity, it being hard to travel to the organization, feeling that there’s nothing new to do or see at the organization, a conflict with holiday, work, or school schedules, and parking challenges. When we focus on admission cost as a primary barrier – especially for these audiences who have already reported interest in visiting – we deliver a hit to our own financial solvency. To reach these audiences, there is often a different barrier to be removed.

When it comes to targeting low-income audiences, access programs are often a necessity. That said, low-income audiences are not generally the audience segments that we rely upon to keep our doors open and our “mission execution” game strong. To support access programs for low-income audiences, it’s necessary for many organizations to have an optimal admission price for the people who can and will attend the organization. For those people – the people who keep us alive if we aren’t a government funded entity –  pricing is not the primary barrier to visitation.

On the whole, the kind of people who want to go to cultural organizations are willing to pay to visit them. The argument for free admission is often an emotional one.  It may feel warm a fuzzy to offer free admission, but for many organizations, it comes with financial and perceptual consequences – and much of the science just doesn’t support it. It’s often better to charge your optimal admission price, and then create effective, targeted affordable access programs for specific audiences. When we focus on admission cost as the primary barrier to engagement, we miss out on the opportunity to remove true barriers.

 

Like this post? Don’t forget to check out my Fast Fact videos on my YouTube channel. Here are a few related posts from Know Your Own Bone that you might also enjoy:

 

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Posted on by Colleen Dilenschneider in Community Engagement, Fast Facts Video, Financial Solvency, IMPACTS Data, Myth Busting, Sector Evolution, Trends Leave a comment

Admission Pricing is Not An Affordable Access Program (Fast Fact Video)

Admission pricing and affordable access are two completely different things that are frequently – and inappropriately – conflated in many conversations. Let’s untangle them and move forward.

Check out today’s new video on the true relationship between admission pricing and affordable access programming.

I’ve recently written about the data-informed evidence that free admission is not a cure-all for engagement. What matters when it comes to engaging audiences are the programs and experiences that an organization offers – not free admission. “Free” does not necessarily mean “worthy of one’s time.”

One of the biggest reasons why the topic of free admission is so sensitive is due to a deeply-rooted (and unhealthy) confusion: The idea that admission pricing and affordable access programs are even close to the same thing. The only thing that admission prices and affordable access programs have in common is that they determine how (and how much) someone “pays” to attend an organization. When organizations jumble up admission and affordable access, they commit one of today’s biggest engagement blunders: They “welcome all” instead of “welcoming each.” Our world, our audiences, and our economics are simply too advanced for this old, “welcome all” approach.

A deeper look at the data:

In reality, optimal admission pricing enables affordable access programming. Within the realm of “affordability,” things can be relatively affordable – that is to say, less expensive is naturally more affordable.  However, once prices cross a certain threshold, being “unaffordable” is binary: A price is either affordable, or it isn’t. Effective affordable access programs that actually reach underserved audiences cost money and require investment. If an organization charges less than its data-informed, optimal admission price, then it may not generate sufficient revenues to support effective affordable access programming.

IMPACTS has consolidated data from different types of cultural organizations and there’s an important lesson here: When organizations deny their optimal, data-driven price point and instead charge “a little bit less,” their admission prices still aren’t affordable for underserved audiences. Moreover, they are too low for a vast majority of the people who actually attend these organizations.

IMPACTS Affordability is binary

As you can see in the consolidated data, a $15 ticket is no more practically affordable for a household earning less than $35,000 per year than is a $20 ticket, so when an organization decides not to charge its optimal price point, the organization both leaves money on the table AND is still unable to reach underserved audiences.

Keep in mind: These prices are compilations from several types of visitor-serving organizations and they illustrate that there’s a certain point in which affordability is binary. So please don’t go rushing off and charging $9…that has absolutely nothing to do with what your high-propensity visitors (the people who actually visit and like going to cultural organizations) are willing to pay. A better way to use this data is to note the difference between what folks earning less than $35,000 per year consider affordable and what the balance of your audiences are willing to pay.

Different household incomes have different capabilities when it comes to paying admission. Here’s another look at the composite data that underscores the point. Trying to find a “middle ground” admission price-point both leaves money on the table from audiences able to pay the optimal rate and also still excludes affordable access audiences.

IMPACTS- General admission pricing analysis

Again, this is consolidated data among different types of cultural centers and nonprofit visitor-serving organizations. It demonstrates why and how affordable access and admission pricing are two, separate strategies and are not intended to stand in for any specific organization’s due diligence in determining its optimal pricing strategy.

As a reminder: Value advantaged means that your organization is leaving money on the table. Value disadvantaged means that you may be starting to jeopardize attendance.

In sum, admission and affordable access are separate strategies. Organizations need a strategic price point for high-propensity visitors, and another completely different strategy to reach, celebrate, and welcome underserved audiences. It’s time that we remove the emotion and start recognizing the necessity of “welcoming each” via unique avenues of access.

 

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Posted on by Colleen Dilenschneider in Community Engagement, Fast Facts Video, Financial Solvency, IMPACTS Data, Myth Busting, Sector Evolution, Trends 3 Comments

How Free Admission Really Affects Museum Attendance (DATA)

Free Admission is not a Driver of Museum Attendance or Engaging New Audiences (DATA)

Spoiler alert: It doesn’t much…and misunderstanding this engagement tactic may jeopardize industry sustainability.

The debate about whether museums should be free is a big one right now. It’s the source of a lot of discussion in the popular press and nonprofit boardrooms alike. What seems to be lost in this discussion are due consideration of two very important factors: First, does eliminating the cost of admission actually help engage underserved audiences? And, second, in a time marked by increasing austerity measures that threaten traditional cultural funding, is eliminating a key earned revenue source sustainable as a long-term business model? The truth is that free admission comes with a cost. Free admission is far from the engagement cure-all that some of its supporters believe it to be.

Am I suggesting that free admission to museums and other cultural organizations is an altogether bad idea? Of course not. For those organizations whose financial models depend less on earned revenues (i.e. those with mega endowments or significant public funding), free admission may prove viable. However, for those organizations whose mission delivery depends on their business viability, then the issue of free admission is a far more complex topic.

Certainly, varying perspectives and important considerations inform this broader conversation, but I’m going to stick to the facts regarding only one aspect of this big issue. For the sake of facilitating intelligent, data-informed conversation about an emotional topic, let’s acknowledge some established facts regarding admission pricing and attendance: 

 

1) Not everyone is interested in visiting museums- and admission price is NOT the primary barrier to engagement

This is a fact that data folks know well, but it’s one that we often overlook as an industry. At IMPACTS, we gather a lot of information on the general public, but we focus particularly on high-propensity visitors (those people who demonstrate the demographic, psychographic and behavioral attributes that indicate an increased likelihood of visiting a cultural organization). These are the people who actually go to museums and cultural organizations. They are the people who say, “Yeah! I’d like to do that!” when the suggestion of visiting a museum emerges. Not everyone is a high-propensity visitor – not by a long shot. In spite of all of our best engagement and marketing efforts, some people simply aren’t going to visit our organizations for several different reasons. As it turns out, admission fees are generally not a major factor in their lack of inclination to visit a museum.

Volker Kirchberg’s landmark analysis, “Entrance Fees as a Subjective Barrier to Visiting Museums,” published in the Journal of Cultural Economics, found that admission cost is a secondary factor when considering a museum visit. A lack of time (i.e. schedule considerations) or a simple lack of interest (i.e. relevance) were far more important factors in one’s decision not to visit a museum than were admission fees. In other words, a decision not to visit a museum is often more a function of lifestyle than finances.

When we consider the population subset of high-propensity visitors (HPVs) – our most likely audiences – cost absolutely pales in comparison to schedule and reputation when it comes to factors influencing their discretionary leisure activities. A big contributor to this often-overlooked fact is that, for both the general public and high-propensity visitors in particular, their time is more important than their money. This data from IMPACTS shows this well:

IMPACTS HPV time verses money

Need even more supporting analysis? According to national survey of museum visitors in New Zealand (Ministry for Culture and Heritage, New Zealand, A Measure of Culture: Cultural experiences and cultural spending in New Zealand), convenience and time are more important factors than cost when it comes to considering a cultural experience. The study further revealed that for those persons who visit museums but are unable to visit more often, the main barriers are lack of time (54%), travel distance (30%), and a lack of transportation (15%). For those who had not visited at all, the main barriers were lack of time (49%), travel distance (29%), and a lack of transport (18%). In fact, for both visitors and non-visitors, cost was only cited as a factor 11% of the time – again, this finding doesn’t diminish cost as a factor…but it does lend perspective to its relative importance in the public’s decision-making process.

Similar results were found in the Visitors to Museums and Galleries Study published in the UK by The Council for Museums, Libraries, and Archives. 32% cited a lack of time as a primary barrier, 22% a lack of interest, 19% a lack of anything they want to see, and 11% noted difficulties simply getting to the site of the organization. Only 8% of those sampled cited admission charges as a negative factor.

In sum: Admission fees are generally not a primary visitation barrier.

 

2) Free admission does not significantly affect long-term attendance.

Admission price doesn’t significantly change intentions to visit for first-time visitors – further reaffirming that if an audience isn’t interested or doesn’t have the time, then “free” won’t get them in the door. There seems to be a sort of thought that free admission means that attendance numbers will go through the roof…and, if an organization does experience a short-term “novelty” spike, then this increase will be sustained. Again, data suggest the contrary. Check out this data from the National Awareness, Attitudes and Usage Study of Visitor-Serving Organizations (which is updated annually and has tracked the opinions, perceptions, and behaviors of a sample population totaling 98,000 US adults):

IMPACTS intent to visit by admission price

The data indicate that intentions to visit within any duration do not significantly increase as the price of admission decreases or is even eliminated. In fact, in most instances, audiences indicate greater intentions to visit organizations that charge more than $20 for an adult admission than those that are free.

It doesn’t stop there. The definitive work on the (negligible) impact of admission price on sustained museum visitation was published by noted economists William Luksetich and Mark Partridge in Applied Economics in their analysis, “Demand Functions for Museums Services.” Their study suggests that the adverse effects of admission charges on attendance are small and ”relatively easy to alleviate.”

That, “If it’s not free, people won’t go” argument? The data has spoken. It’s not a thing.

 

3) Free admission accelerates re-visitation- but for audiences who are already visiting

Free admission does accelerate the re-visitation process – but mostly from existing audience members. This finding is from a study by the UK’s Department of Culture, Media, and Sport (DCMS) – whose members instituted free admission in year 2001. The DCMS study found that attendance increases frequently attributed to removing admission fees were often due to the same audiences visiting more frequently – NOT necessarily from engaging new audiences.

Basically, to the degree that organizations consider an attendance increase as a successful outcome of eliminating admission pricing, the key visitor count to examine isn’t total visitation – it’s unique visitation. For example: Let’s say that a museum with an admission fee receives 400,000 annual visits from 300,000 unique visitors (1.33 visits per unique visitor).  Then, the same museum decides to “go free” and annual attendance increases by 15% to 460,000 visitors – but from the same 300,000 unique visitors (1.53 visitors per unique visitors). In this hypothetical example, annual attendance went up…but unique visitation remained the same.

Again, data from the National Awareness, Attitudes and Usage Study of Visitor-Serving Organizations reaffirms this finding:

IMPACTS intent to revisit by admission price

Whereas free admission does not impact intentions to visit for first-time visitors, it does increase intentions to re-visit for existing audiences. The implication? It may not be wholly accurate for an organization to declare success by citing raw attendance numbers as proof of the efficacy of a free admission policy. There isn’t evidence that free admission generally cultivates increased visitation from new audiences. 

 

4) We need to engage emerging audiences- and free admission is not a cure-all for greater industry challenges

Data suggest that cultural organizations need to be reaching new audiences right now if we want these types of organizations to be around in the future. Offering free admission in an attempt to appeal to emerging audiences isn’t a complete solution to a more complex problem. We need to reevaluate our strategy for engaging new audiences because the “free admission” fix may not prove sustainable. Moreover, focusing on free general admission may be distracting organizations from cultivating more effective engagement strategies and programs for reaching new audiences.

Consider that Smithsonian Institute museums – without admission fees – saw total attendance decline by nearly 7% from 30 million visitors in years 2012 and 2013 to 28 million visitors in year 2014. In the same duration, the US population increased from 314 million (2012) to 319 million (2014). Also, in the same duration, overseas visits to the US increased from 29.8 million in 2012 to 34.4 million in 2014. Visitation to many museums – even world-famous, free museums – is not keeping pace with population growth.

Our industry is rife with examples of how even organizations with free admission are unable to cultivate increased (or, in many cases, even stable) attendance levels – particularly when considered in the prevailing context of overall population growth and travel to the United States. Free admission does not serve as engagement panacea. For example, In 1997, attendance at the Baltimore Museum of Art – then with an admission basis – approximated 320,000 annually. In 2006, the Baltimore Museum of Art eliminated admission charges. Today, onsite annual attendance is down 44% to 180,000. The organization attributes this decrease in attendance to the BMA’s recent renovation project. There are many factors that affect attendance and admission pricing is hardly the cure-all that many imagine it to be.

 

This data simply scratches the surface of this controversial debate. There are other, incredibly important factors to consider: individual business models, the impacts of increased reliance on contributed revenues and government funding, opportunities to develop more agile operations so as to allow museums to be more audience-focused, and even the reputational equities attendant to being a “free” organization versus one with an admission fee.

One thing is for sure: Critical conversations are taking place and organizations are realizing that it’s time to evolve both their engagement models and their financial plans. We have too much to lose not to move forward in the most fully-informed manner possible. If we want to keep museums alive, we need to think about engagement, audience motivations and barriers, and actual economics.

 

Like this post? Here are a few related posts from Know Your Own Bone that you might also enjoy:

 

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page (or ). Or for more regular sharing of nonprofit marketing information, follow me on Twitter

Posted on by Colleen Dilenschneider in Community Engagement, Financial Solvency, IMPACTS Data, Myth Busting, Sector Evolution, Trends 27 Comments

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.

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page. Or for more regular sharing of nonprofit marketing information, follow me on Twitter

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