Here in Chicago, dynamic pricing has come to the theater district. More specifically to the Goodman Theater, a popular non-profit theater company (How theater ticket prices are changing like airline fares, Chicago Tribune, Oct 22).
When the Goodman Theatre announced its prices for its current production, “Sweet Bird of Youth,” starring Diane Lane, it listed $89 as the top ticket price for that show, a price that duly appeared in this newspaper. And had you bought your decent main-floor seat for the Oct. 27 performance three weeks ago, $89 is indeed what you likely would have paid. On Wednesday afternoon, there still were tickets available on the Goodman website for that Saturday evening performance. But the top price? $120. …
Dynamic pricing — otherwise known as revenue management, progressive pricing or the computerized art of changing a ticket price over time based on actual supply and demand — has arrived with a vengeance in the nonprofit world, even if few Chicago institutions have invested in the sophisticated computer software and arts consultants, like the Target Resource Group, that allow the Goodman (and such institutions as the Kennedy Center for the Performing Arts in Washington) to adopt dynamic pricing with such sophistication.
At the Goodman now, prices not only go up, they also go back down. It is possible for you to call the theater’s box office three times during the week, request the same seats and be offered three different prices. …
So is the dynamic pricing model the way a mission-oriented, nonprofit arts group should be operating?
Obviously, that last question is an intriguing one. But it is also in some ways troubling since it seems to assume that some ways of pricing and selling are more moral than others. Given that the Goodman and its patrons are engaged in voluntary transactions (no one’s mom is being held hostage until they pony up for theater tickets), why should the Goodman’s decision to vary prices be at all in conflict with their mission as a non-profit?
The company’s executive director Roche Schulfer defends the policy as follows.
“When a show has strong demand,” Schulfer said, “that allows us to raise additional revenue that allows us to lower prices at other times.”
Schulfer made several other salient points. Dynamic pricing, he noted, applies only to single tickets, when the vast bulk of the audience buys lower-cost subscriptions. “You could have bought the entire eight-play season back in August,” he noted, “for as little as $180.”
He also said that the Goodman, like most nonprofits, is concerned about price sensitivity and accessibility and has a variety of programs offering concessions to certain groups and those willing to take their chances at the last minute.
It is hard to object to a non-profit finding some way to make a surplus in one setting to assure that other activities can be funded. The Goodman every year stages A Christmas Carol while the Joffrey Ballet always does The Nutcracker. Perhaps the performers find these challenging and never tire of taking them on. Or the companies just want something that reliably fills the seats and subsidizes riskier shows in the rest of the year. While some patrons may be tired of these productions, it is hard to argue with rolling out a reliable holiday favorite if it assures the organization’s solvency.
So why should dynamic pricing be different? It may just be a question of access. While dynamic pricing should result in bargains as well as high prices, those bargains may not uniformly available. For example, Saturday night may be the only feasible time to go to the theater for many working people regardless of how much they earn. If Saturday tickets get bid up, less affluent theater lovers may be shut out and unable to take advantage of cheap tickets on Wednesday night. Of course, it is not clear that static prices solve this problem. If prices don’t rise over time, the Saturday night show may sell out faster while spinning off less extra cash. Further, there would be no discounts on Wednesday.