I have been seeing a great deal of discussion on pricing in terms of outreaching to build an audience.  Dynamic pricing has been discussed (think airline pricing with prices being lower with earlier purchase).  Also, Groupons or Living Social, or coupon sales have been discussed.  Both options can build “butts in seats,” but do they build “people in seats” or a loyal audience for your art/organization?  Maybe, maybe not.

I’ve decided to play devil’s advocate in this blog to see the other viewpoint of this conversation:

Here’s the “deal!” Lowering price is  a technique to get people interested.  It is an incentive for them to purchase, perfect for people on the fence since it nudges them to the side of buying.  However, these discounts can give the wrong message to your potential audience.

1. It can send a message that you are not worth more than these discounted prices.  Your audience might get used to these pricing points.  In attempts to raise the price to more normal levels, you might not see a “return” on your discount investment.  This factor could be accommodated by only having these special deals at rare occasions, but these audience members may become savvy and wait until the sale happens instead. In this case, you may see a return, but at the continued discount prices.  It’s definitely a gamble.  Can you ultimately afford this?
2. If there is no follow up involved, there is no guarantee that these deal buyers will turn into loyal audience members. Using discount methods may get people in the door, but it does not guarantee them coming back.
3. Deep discounts could send the wrong message that you can afford selling at these prices.  I understand that there could be an argument that you can’t afford not to sell at these prices to get “butts in seats” with the potential to convert, but I guess it all depends on your bottom line.  In my opinion, there are ways to sell the value of your art/organization without deep discounts.  If people see the value, they will purchase at a regular price.  I can’t be the only one willing to go out of my way or purchase at a higher price if the quality and value are there.  If you really want something, you will pay the price.  Maybe we need to focus on people wanting the arts experience more instead of pricing less.
4. Discounted prices can be a signal that you may not need extra support.  As I mentioned in a conversation, one of my patrons asked about our discounted subscription: “Why are you discounting? Don’t you need the money?”  Discounts can cause this confusion. Plus, people view their ticket purchase as a means to supporting the art/organization.  If you ask for a donation on top of this discounted amount to supplement, they may simply say they already purchased tickets.  You will then be out the difference of the discounted price vs. regular price, and out the donation amount since the perception has now shifted.In more consideration to these conversations, perhaps adding the choice of not discounting and paying regular price could give loyal patrons the opportunity to be  loyal, which will give you the option of being open and honest in communicating that you need the continued support.
5. Groupon and Living Social may be popular methods, but as a nonprofit arts manager, I would look for other ways to get the word out about discounts so you don’t have to split your revenue.  Getting less than 50% of the value of a ticket doesn’t sit well with me or with most nonprofit budgets.  With ticket purchases averaging only 30-40% of  income, can you really afford to give so much away?  Shouldn’t you be figuring out ways to increase this percentage instead of lowering it?  Unless the shear volume of purchase compensates for the lowered revenue, I would look into other avenues that may cost considerably less.  Of course you need to look into the quantity vs. quality issue too.  More purchases may not equal a quality audience.

I understand the need to get people in the door, but I also see that starting people off with a discount may be setting ourselves up for some rude awakenings.  Perhaps this is one of the reasons that building loyalty has been tricky.  I guess it can be a means of sifting out who will become more loyal patrons and who are simply there for the discount if follow up occurs, but it can also mean that you are sending out the message that the arts are not worth more than a vastly discounted price, lowering the value of the arts along with continued lowered monetary support.

The only way discounts first as a method can work in the long run  is if you can convert these discount buyers to see the full value of your art.  If they see the value, then maybe they will be willing to pay full price in the future.  Are we implementing programs to make sure this conversion happens?

However, on a further limb,  discount pricing to build an audience, in my opinion, should be used more as a last resort and not as a first resort.  I tend to discount towards the end if seats still need to be sold. The audience that is loyal will purchase at the regular price.  The audience that sees the value will too.  The audience that is on the fence will buy based on the later discount.  You might be shooting yourselves in the foot if the discount is sooner rather than later.  The loyals may purchase at the discounted price since they tend to purchase sooner than later, costing you the difference.

In some ways, inviting them for free may be better since they will know that this won’t last and regular pricing is going to happen.

Lastly, without audience development, nothing will be developed except lowered value in the end.  Have you honestly tried audience development?  I know when I switched to audience development and fair valued pricing, I found myself with a bigger and better (quality) audience.

Cheers to happy and loyal audiences,