Could a Broadway show learn from Uber and Postmates?
Companies usually drop prices for two reasons:
- They believe that a lower price will sell more of their product or service so profit margins will increase.
- They are in a price war with a competitor.
What interested me about both of these companies’ recent cuts was that they got press out of it. And we all know press sells stuff.
So that got me wondering two things:
- Would the press care if a Broadway show cut prices?
- Would the cut sell more tickets to the show and increase the show’s profit?
The truth is, Broadway shows have cut prices before. But we just don’t tell anybody about it. If we see a section isn’t selling (usually the middle section of the house – top price sells, bottom sells, middle sits) we make adjustments.
But what if a show came out with a big announcement like Uber and said, “Hey, we hear you, we’re going to cut our prices.”
Would it get press? Yes, if it was a big enough decrease.
Would it make more money for the show? Trickier question.
First, it’s important to realize that Uber and Broadway are two very different types of companies. Uber doesn’t pay its drivers unless Uber is getting paid – our industry ain’t like that. Same with Postmates. So they can be more aggressive, in an effort to acquire customers and take less profit in the short term with the hopes of getting repeaters in the long term.
That brings up difference #2 between our industries. Our industry isn’t built on repeaters. We acquire customers with the hope that they’ll get their friends to come, not to get them to come back (because most just don’t).
So right away, that’s two strikes against playing this kind of pricing game.
But wait . . . don’t give up just yet.
I do think this strategy could work. But, like most Broadway promotions, it would depend on what show used it.
I’d take a show that was several years into its run. A show that was already proven to audiences. A show that had already made money for its investors. But maybe a show that was starting to fade away, in light of all the new, sparkly shows opening each season. A show that could use some press.
Take a show like that and announce a “We hear you. Broadway shows are expensive. So we’re cutting prices,” and yeah, I think you’d see a lot of people come out of the woodwork to see the show . . . as long as there was already interest in the market in seeing that show.
And, after it worked . . . you could always raise your prices back up later on . . . because you know Uber will.
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