3 Steps to pricing your show.

Because this blog is going to be about pricing, let’s just get this out of the way first . . . ready, say it with me, “Broadway tickets are too expensive!”

Ok, we all feel better?

Now, let’s talk about how these (too expensive) prices are derived in the first place.

Marketing 101 tells us that price is one of the fundamentals of the marketing mix.  (It’s one of the “4 Ps”, the others being product, promotion and place.)  So determining that price is going to be a crucial decision for you as a Producer (or frankly as any kind of business owner) . . . and it’s one of the first decisions you have to make!  (How can you market something before knowing how much it’s going to cost?)

So how do you do it?  You follow these three easy steps . . .

1.  Look at the market.

As one of my first mentors said to me, “Life is an open book test.”  One of the first things I’ll do with my ad agency before we even think about what we’re going to charge is look at what everyone else is charging.  How much are the big hits that opened years ago charging?  How much are the brand new shows charging?  Plays versus musicals?  Within a few minutes we’ll have a range of what shows like mine are charging and boom, we’ve already narrowed it down to what we think the market will bear.  Now the question is, where do we fit on that scale?

2.  Look at the budget.

This is one of the reasons that theater tickets are expensive. While we’d all love to just charge a heck of a lot less for tickets, Producers need to make sure that the price of the product is not only equal to the value of the product (live entertainment should be more expensive than recorded entertainment, just like a Mercedes should be more expensive than a Smart Car), but that it also works within the budget of the production.  To extend that car metaphor, think of a budget like a giant car engine . . . and the right price is like the right key . . . it starts it up, and gets it running perfectly.  Broadway investors, like all investors, look for recoupment rates that are achievable, and provide a chance for significant upside (when you take a risk like investing in a Broadway show, you want to make sure you can make some good money on the other side, if you’re lucky enough to get there).  Finding the right price is “key” to making sure your financials are attracting enough to get your show on the road (while using Step #1 to make sure you’re not driving outside the lines).

3.  Look at the sales.

Once you get through Steps #1 and #2, you should have an idea of what you want to charge.  So what do you do?  Set it . . . except do NOT forget it.  Set it, and watch it.  Closely.  Prices can and SHOULD be changed depending on how the audience reacts to them.  I’ve changed my full price on some shows countless times . . . especially long runners (do you think Phantom is still charging the same as it did when it opened?).  I’ve dropped prices two months after opening.  I’ve increased prices by as little as $0.49 a year into a run (that netted me around $50k in just one year).  More than ever, the price for your product can be “variable.”  Launch, then test, change, shift, go up, go down . . . until you are maximizing your sales.

Setting the price for your show can be very stressful.  What if I set it too high and no one buys?  What if I set it too low and I can’t make my “nut?”  Follow the steps above, and it’ll minimize your stress, and maximize your returns.

But how do you know if you’ve priced it correctly?

I asked another mentor that same question about twenty years ago and he said, “Well what do you think, Ken?”

“If I sell out the house?”

“Nope.”

“Then what?”

“You’ll know you’ve priced it perfectly if you sell every single seat in the house . . . except one.”

 

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Comments
  • Jared says:

    I think (one of) the problem with Broadway pricing is that every show is priced under the assumption that it is going to be a hit. The prevailing operating theory seems to be “let’s price this as high as we think we can get away with, and then discount if tickets don’t sell.” I think this is a bad idea and is part of why Broadway shows these days seem to either be massive hits or quickly fade; the high point of entry means that unless people are sure they want to see something, they stay away, and shows that aren’t immediately appealing have trouble building word of mouth because no one is willing to risk $60+ to sit in the back row for a show they may not even like. And once shows start heavily discounting to try and make up the difference, it sends the message that the show is in trouble and can make people question why no one else seems to be interested in this piece of entertainment.

    I really think there should be regularly priced tickets available for less than $40/seat for EVERY performance. They shouldn’t require waiting in a rush line, they shouldn’t require being under a certain age (unfortunately, turning 30 does not suddenly grant access to large amounts of disposable income), and they shouldn’t disappear after previews. If the show is a huge success, increase the orchestra seats by slightly more than you normally would to make up the different. After all, is an extra $10-$15 really going to be the make or break mark for most of the people already willing to pay $160 a head for Hamilton? Does a show like Hamilton even need the extra few hundred dollars per performance changing $60 for the last row of the mezzanine would bring versus charging $40? I’d argue that 95% of the time, the answer to both questions is no, but the fear of being in that 5% keeps producers from making Broadway shows even slightly more accessible to general audiences.

  • I just returned from ten days in the city (which is a whole hour and a half from me in CT – but it seems like a hemisphere away) during which we saw four shows. “On the Town,” “An American in Paris,” “Finding Neverland,” and “Amazing Grace.” Now, I’m taking “Amazing Grace” out of the equation, as I was fortunate enough to win the tickets here on this website, so I don’t know what the cost of the seats would have been had I paid for them. For the other three, We paid approximately $160 each seat (okay – so I like good seats, what can I say?). When I think of the number of dinners we’ve eaten, bottles of wine we have drank, shirts and shoes I have purchased, etc. etc. etc. – all in the same figure ballpark – none of them have brought the joy, excitement, thrill and exhilaration, nor the memories I will have for years, of seeing those shows.
    Yes, theatre seats are expensive. But so is everything of quality and skill (going right back to the car comparison in the original blog post!). I’m never going to be HAPPY that it costs that much to see a show – but I’ll pay it rather than miss a possible experience-of-a-lifetime. And, in all the years I’ve watched Broadway shows (and I started as a kid when my parents took me), I’ve only really disliked two plays – and only walked out of one show at intermission (and that was a landslide hit that I found to abominable). Those are not bad odds when it comes to investment.

  • Ted says:

    Whenever Marcus Lemonis invests in a company, (The Profit) he uses these 3 P’s to decide if he should invest. “Product, process, people”… If all those line up, he will invest.

  • Rick says:

    If you sell out, you charge too little; if you have empty seats, you charge too much.

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