Dynamic pricing, the tactic of raising prices after tickets go on sale, has often been in industry headlines these days. However, when it comes to growing revenue and increasing patron loyalty, it’s not the whole story. While it’s true that Vancouver's Arts Club Theatre Company (ACTC) generated six-figure revenue from dynamic pricing, the real news is how ACTC increased the number of its most loyal subscribers. Presented in August 2011, TRG consultants and ACTC staff retell ACTC’s $3 million client success story, including how: - Loyalty strategies -- not pricing tactics -- led to sustaining revenue. - Unified, company-wide change in focus brought about increased revenue and subscribers. - Dynamic pricing made subscribing more valuable.

1. Webinar
Dynamic Pricing is NOT
The Story

2. Welcome
Rick Lester
Chief Executive Officer

3. Please:
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4. The tactic of dynamic pricing is the practice of
raising ticket prices after they go on sale for
programs that have high patron demand.
It’s demand strategies – not tactics -- that lead
to sustainable patronage and revenue.
DYNAMIC PRICING

5. Presenters
Howard Jang
Executive Director
Arts Club Theatre Company
Laura Willumsen
TRG Senior Consultant

6. ARTS CLUB THEATRE COMPANY

7. ALVIN AILEY: One-Season Success
$1 Million Increase in Revenues
64,000 $4,500
Sales Revenues (thousands)
62,000
$4,000
60,000
Admissions
$3,500
58,000
$3,000
56,000
$2,500
54,000
52,000 $2,000
2000 2001 2002 2003 2004 2005 2006
Seats Sold 58,245 62,221 55,603 56,512 59,193 56,873 60,634
Revenue $2,511 $2,669 $2,622 $2,742 $3,028 $2,960 $3,958

8. BOX OFFI CE REVENUE 2003- 2008
$6,000,000
$5,000,000
$4,000,000
$3,000,000
Total Revenue
Budgeted goal
$2,000,000
$1,000,000
$-

9. “If Ailey made $1 million,
wouldn’t it be great
if we could make $200K?”

10. REVOLT!

11. Enter the Americans

12. Timing is everything!

13. Step 1: Prices not right
 TOO MANY DISCOUNTS
• Groups, Seniors, Students
 1-PRICE HALL
• Different price each night
 STUCK IN THE MIDDLE
• Top price too low
• Bottom price too high
That approach led to…

14. Medium sold show at the Stanley
2007-08
Stanley Theater 08-09 10172008
RIGHT BALCONY CENTRE BALCONY LEFT BALCONY
149 148 147 146 145 144 143 142 141 140 8 8 110 109 108 107 106 105 104 103 102
150 149 148 147 146 145 144 143 142 141 140 7 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 7 111 110 109 108 107 106 105 104 103 102 101
150 149 148 147 146 145 144 143 142 141 140 6 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 6 111 110 109 108 107 106 105 104 103 102 101
150 149 148 147 146 145 144 143 142 141 140 5 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 5 111 110 109 108 107 106 105 104 103 102 101
150 149 148 147 146 145 144 143 142 141 140 4 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 4 111 110 109 108 107 106 105 104 103 102 101
150 149 148 147 146 145 144 143 142 141 140 3 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 3 111 110 109 108 107 106 105 104 103 102 101
150 149 148 147 146 145 144 143 142 141 140 2 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 2 111 110 109 108 107 106 105 104 103 102 101
150 149 148 147 146 145 144 143 142 141 140 1 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 1 111 110 109 108 107 106 105 104 103 102 101
RIGHT ORCHESTRA CENTRE ORCHESTRA LEFT ORCHESTRA
50 49 12 35 34 33 32 23 22 21 20 12 2 1
11 29 28 27 26 25 11
10 30 29 28 27 26 25 10
9 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 9
50 49 48 47 46 45 44 43 42 41 40 8 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 8 11 10 9 8 7 6 5 4 3 2 1
50 49 48 47 46 45 44 43 42 41 40 7 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 7 11 10 9 8 7 6 5 4 3 2 1
50 49 48 47 46 45 44 43 42 41 40 6 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 6 11 10 9 8 7 6 5 4 3 2 1
50 49 48 47 46 45 44 43 42 41 40 5 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 5 11 10 9 8 7 6 5 4 3 2 1
50 49 48 47 46 45 44 43 42 41 40 4 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 4 11 10 9 8 7 6 5 4 3 2 1
50 49 48 47 46 45 44 43 42 41 40 3 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 3 11 10 9 8 7 6 5 4 3 2 1
50 49 48 47 46 45 44 43 42 41 40 2 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 2 11 10 9 8 7 6 5 4 3 2 1
48 47 46 45 44 43 42 41 40 1 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 1 11 10 9 8 7 6 5 4 3
46 45 44 43 42 41 40 A 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 A 11 10 9 8 7 6 5
STAGE
Highly visible holes up front
and on sides

15. Solution 1: Rescale, Price Right
 NO AUTOMATIC DISCOUNTS
 3-PRICE HALL: all available every night
• Helped fill visible holes
 $25 LOW-ENTRY PRICE
• Advertised everywhere
Results from the new approach…

16. Medium sold show at the Stanley
2008-09
8 149 148 147 146 145 144 143 142 141 140 8 8 110 109 108 107 106 105 104 103 102
7 150 149 148 147 146 145 144 143 142 141 140 7 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 7 111 110 109 108 107 106 105 104 103 102 101
6 150 149 148 147 146 145 144 143 142 141 140 6 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 6 111 110 109 108 107 106 105 104 103 102 101
5 150 149 148 147 146 145 144 143 142 141 140 5 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 5 111 110 109 108 107 106 105 104 103 102 101
4 150 149 148 147 146 145 144 143 142 141 140 4 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 4 111 110 109 108 107 106 105 104 103 102 101
3 150 149 148 147 146 145 144 143 142 141 140 3 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 3 111 110 109 108 107 106 105 104 103 102 101
2 150 149 148 147 146 145 144 143 142 141 140 2 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 2 111 110 109 108 107 106 105 104 103 102 101
1 150 149 148 147 146 145 144 143 142 141 140 1 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 1 111 110 109 108 107 106 105 104 103 102 101
RIGHT BALCONY CENTRE BALCONY LEFT BALCONY
12 50 49 12 35 34 33 32 23 22 21 20 12 2 1
11 11 29 28 27 26 25 11
10 10 30 29 28 27 26 25 10
9 9 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 9
8 50 49 48 47
46 45 44 43 42 41 40 8 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 8 11 10 9 8 7 6 5 4 3 2 1
7 50 49 48 47
46 45 44 43 42 41 40 7 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 7 11 10 9 8 7 6 5 4 3 2 1
6 50 49 48 47
46 45 44 43 42 41 40 6 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 6 11 10 9 8 7 6 5 4 3 2 1
5 50 49 48 47
46 45 44 43 42 41 40 5 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 5 11 10 9 8 7 6 5 4 3 2 1
4 50 49 48 47
46 45 44 43 42 41 40 4 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 4 11 10 9 8 7 6 5 4 3 2 1
3 50 49 48 47
46 45 44 43 42 41 40 3 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 3 11 10 9 8 7 6 5 4 3 2 1
2 50 49 48 47
46 45 44 43 42 41 40 2 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 2 11 10 9 8 7 6 5 4 3 2 1
1 48 47
46 45 44 43 42 41 40 1 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 1 11 10 9 8 7 6 5 4 3
A 46 45 44 43 42 41 40 A 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 A 11 10 9 8 7 6 5
RIGHT ORCHESTRA CENTRE ORCHESTRA LEFT ORCHESTRA
 Moved patrons from back to front
Filled visible holes on sides

17. The Payoff
Arts Club Theatre 16% increase
Per Capita Growth = $5 per
$80 ticket!
$70
$60
$50
$40
$30
$20
$10
$-
2007-08 2008-09 2009-10
Subscriptions Singles

18. Step #2:
Comp Tickets Out of Control
22,000 comps in 0708
• At average ticket price of $35, worth
$ 770,000
• Required a culture shift
The steps we took

19. Solution #2:
Get Control of Comp Tickets
Arts Club
Strict new policies Total Ticket Revenue vs. Comp Tickets
•Especially for high- $8,000,000 25,000
$7,000,000
revenue shows 20,000
$6,000,000
$5,000,000 15,000
Reduced comps by $4,000,000
10,000
7,000 in two years $3,000,000
• $266K value
$2,000,000
5,000
$1,000,000
$- -
2007-08 2008-09 2009-10
Total Revenue Comps

20. Step #3:
Stop selling late!
“Everyone here waits to
the last minute to buy!”

21. Solution #3:
Reward early buying!
WHITE CHRISTMAS: THE MUSICAL OPENING NIGHT
SOLD OUT!
$1,200,000
$1,100,000
$1,000,000
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
YTD Actuals Sales Goal
Previous pattern = 25%-40% revenue
made during the production

22. Step #4: Confront Flexibility
 EVERYONE ACTC Stanley Subscriptions
FY05 - FY09
wants 8,000
7,000
flexibility, right ? 6,000
5,000
ACTC offered 4,000
3,000
multiple flex pass 2,000
1,000
options throughout 0
their campaign 2004-05 2005-06 2006-07 2007-08 2008-09
Stanley 6,870 6,779 6,891 7,075 7,014

23. Arts Club TODAY
Focused on High-Loyalty Subscriptions
 STANLEY SERIES
UP
• High renewal rates ACTC Stanley Subscriptions
FY05 - FY11 up 33%
(average 77%) 10,000
• Units up 33% 9,000
• Revenue up 62% 8,000
7,000
6,000 TRG
FLEX SERIES 5,000 TRG
4,000
DOWN 3,000
• Low renewal rates 2,000
(13%-48%) 1,000
0
• Units down from 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
40% of subs in 0708 Stanley 6,870 6,779 6,891 7,075 7,014 8,609 9,328
to 22% in 1011

24. Oh yes….we did dynamic
pricing!
$430K
$4.4 million
We had the programs!

25. Dynamic pricing
 REVENUE: 10% of all single & group revenue (0809)
 NEW WAY TO WORK: Revenue Pacing Meetings
• New sales pacing reports
• Heat maps
• Sold capacity by performance & price point
• Comps & holds

26. But wait…there’s more!
Dynamic pricing helped
sell subscriptions!

27. So what did it take?
 Willingness to change
 Leadership ensuring that everyone is on board
 Intense focus on high-loyalty packages
• Greater investment = greater benefits
 Relentless focus on demand
• Pricing based on demand
• Inventory management to improve perception
• Programming that generated demand
RESULTS?

28. Arts Club RESULTS 66% increase in
All ticket revenue through 0910 revenue from 0708
almost $3 million
ACTC Ticket Revenue
FY04 - FY10
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
TRG
$2,000,000
$1,000,000
$0
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Single Tickets $2,857,899 $3,030,655 $3,428,298 $2,965,951 $2,684,263 $4,463,706 $5,115,463
Subscription $1,183,290 $1,414,451 $1,559,292 $1,644,498 $1,772,694 $1,912,326 $2,291,351

29. AND THE SURPLUS BUILT…
Improved Facilities
for Patrons!

30. Webinar
Questions?
Dynamic Pricing is NOT the Story

31. Webinar
What’s new? What’s next?
www.trgarts.com