Panel / Dynamic pricing - Panel / Dynamic Pricing - Led by Tim Roberts. Speakers: Steven Baillie,...

7/31/2019 Panel / Dynamic pricing - Panel / Dynamic Pricing - Led by Tim Roberts. Speakers: Steven Baillie, Alon Ellis and Amelia Hordern

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www.thinkaboutpricing.com@artsoz

Tim Roberts Amalia Hordern Steven Bailey Alon Ellis

Principal Consultant CRM Manager Head of Ticketing Services Senior Manager

ARTS Australia The Australian Ballet Sydney Opera House Deloitte Analytics

Dynamic Pricing


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Some Characteristics of Arts Demand

1. A finite and fixed supply

2. A service that matures i.e. perishable

3. A variable demand

4. Not for profits i.e. other aims than just profit

maximisation e.g. access and equity

5. Price impacted by socially responsive

discounts


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Defining Some Terms

Revenue Management is about optimising volume of attendance for a

perishable good (in our case, the seat), as well as maximising yield. Ittherefore includes reducing prices to stimulate low demand as well as increasing

prices to exploit high demand.

Yield Management focuses on one half of the Revenue management

equation: maximising income from those buyers who are most priceinelastic.

Variable Pricing charging different prices, by performance(production/date/time), or by seat location.

Dynamic Pricingcharging different prices for the same seat. Refers to

the adjustment of Variable Pricing over the sales cycle in response to

emerging and changing patterns of consumer demand.


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Dynamic price control: issues to

consider In a sense, dynamic pricing acknowledges that you got the prices

wrong to start with.

Changing prices is the easy bit!

Adjust discounting

Change scaling

Change prices

The tricky bit is knowing when to do it, and when not to

If you leave it until youre 80% sold, youve missed most of the

opportunity

Forecasting and monitoring are fundamental to managing dynamicpricing...


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Dynamic pricing

Presentation iscritical and canbe very simple

www.stratfordfestival.ca


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Dynamic Pricing in the ArtsConcepts, challenges and benefits

Alon Ellis, Senior Manager Deloitte Analytics

Melbourne, 25 May 2012


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Advanced pricing methodologies can increase revenue,

while improving equity

Elasticity Based Pricing

Increasing margins on potential customers who valuebrand & service, while decreasing margins on priceconscious consumers, for example:

High income households tend to pay more

Minority groups tend to pay less

Resulting in 2%-6% increases in revenue, and reduced

complaints from consumers.

Dynamic Pricing

Penalising potential customers who book tickets when thevenue is nearing maximum capacity, for example:

If a particular show isnt selling well, prices will fall

If a particular show is in high demand, early birds willmake savings

Resulting in 2%-10% increases in revenue, and

increased yields.

2

Both approaches reward behaviours

based on a mathematical definitionof costs, and optimal outcomes

Profitper

unitsold

Price

Probability

ofsale

Price

Expected

pro

fit

Price


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Offers price

$

Dynamic pricing is spreading into new industries, resulting in increased

competition and improved outcomes for consumers

Then Now

Dynamic pricing existed primarily with expiring goodssuch as airline seats and hotel rooms

Dynamic pricing is continuously evolv ing between sellersand buyers with mobile price discovery, preferencingengines and 3rd party reviews giving consumers more

information and power to negotiate with retailers

Consumer

Airlines and hotels

Consumer

Retailers

Product

and user

reviews

Sellers vary prices according to supply and demand

Consumers accept prices set by sellers

Easy access to information related to products and

retailers is making the consumer a more discerning and

price aggressive shopper

While at a retailer, consumers can price compare andnegotiate with multiple retailers simultaneously in search

of the best offer

Reverse auction websites (e.g., Priceline.com and

Oltiby.com), allow consumers to negotiate passively,

minimizing cultural stigmas associated with negotiating


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Dynamic pricing models are being successfully deployed

across a range of industries, including the arts

Customers vary in their valuation of yourproducts, and in the costs incurred by the

business, so shouldnt offerings be varied?


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Without a coordinated strategy, consistent policies and

aims, dynamic pricing can create inappropriate outcomes

Pricing strategy, organisational alignment and data inputs are key inputsthat need to be linked together in order to get a successful outcome.


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A range of considerations need to be made when

transitioning to a dynamic pricing model

6

Considerations

What is the objective ofyour organisation, andhow do you trade offvarious interests /demands?

How do you intend todistribute subsidies?

How do you define anefficiently utilised venue?

How aggressively shouldchanges be executed?

Potentialchanges

Seating package changes

Memberships & season

passes Packaged offers (dinner &

a show)

Ticket options


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The Australian Ballet andDemand Based PricingA case study

Australia Council Marketing Summit

Friday 25 May 2012

Amalia Hordern

CRM Manager

The Australian Ballet

Steven BaillieHead of Ticketing Services

Sydney Opera House


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Overview

Background on DBP implementation

A phased approach

Major considerations The venue partnership


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The challengeTo unlock revenue opportunities without

alienating loyal audiences through

significant, across the board price

increases

Demand based pricing

Dynamic based on real time market

demand


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So, how did it go .?

2011 an additional 8% single ticket revenue

2012 projections indicate further growth

No negative customer feedback


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Our structure

Box office represents 56% of revenue

Subscription based program

Audience comprises 57% subscribers

Renewable seating

Loyal subscriber base

Mixture of full length and mixed bill repertoire


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Our situation

Schedule limits company and venues

Restrictive subscription footprint

Limited unsold capacity

Diminishing per capita ticket yield


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The Australian BalletSingle Ticket Sales vs. Per Capita Revenue

Sydney 2005-2010 YTD

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Units

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

PerCap

Total Units Per Cap

2010 Silver

Rose Per Cap:

$97.07


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The desired outcomes

Revenue maximisation

Encourage early booking

Increase perception of demand

Remodel customer buying behaviour

Refine marketing communications


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Has it worked?

Revenue certainly but customer

behaviour?

2011 Sydney season of Graeme Murphys

Romeo & Juliet sold out prior to opening

2012 Sydney general public on sale

demonstrated 23% increase on 2011

2012 Brisbane and Adelaide seasons

shift in buying patterns


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Demand based pricing structure

Per production relatively simple maintenance

relatively straightforward communication

limited influence on behaviour

Per performance increased revenue opportunities

potential behavioural influence

greater transparency

greater maintenance


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Major considerations

Resourcing

System build and reporting

Clear communication strategy

in print

online

in person

Support from venue partners

What price will the market bare?


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Key messages for our sales staff

TAB operates in a demand situation Buy now to secure the best price

Reiterate prices are subject to change

Shared with venue

FAQs

Quick reference sheet

Dispute resolution process


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Tools

Quick reference for sellers...

FAQsOnline priceCaveat & Pricing Range

TelephonyForced Incoming Messaging

Encourage early, multi-purchase


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Major considerations

Resourcing

System build and reporting


in print

online

in person

Support from venue partners

What price will the market bare?


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Whats next? Opportunities for seasons otherwise below

the threshold

Per price zone for optimal revenue

maximisation opportunities but not just yet!

Experimental rescaling

How do we communicate our pricing

strategies into the future?


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Key considerations A structured model important but value is inflexibility


Support of venue partners

Maintain accessible pricing points

Consider in a loyalty framework


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The Australian Ballet and

Demand Based PricingA case study

Amalia HordernCRM Manager

The Australian Ballet

[email protected]

Steven Baillie

Head of Ticketing Services

Sydney Opera House

[email protected]


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Dynamic Pricing


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