I’ve had a few questions to answer on pricing and I’ll continue to post them here and offer some additional thoughts on an upcoming podcast…
Today’s question is about why people continue to give away free tickets.
“Papering the house” in the terms of the ticket industry.
There are a number of reasons that people will use to justify comping tickets.
Sunk costs:
If the show is going on. An empty seat takes up almost as many resources as a full seat.
But the empty seat won’t spend money on merchandise, concessions, or share anything about its experience.
The downside of this is that a lot of times you don’t get all the people with free tickets to come to the show. You also can give the impression that the show/game isn’t in demand.
But if you are just trying to give the impression of a full house and help make it feel like there is momentum…you can justify comping the tickets.
Marketing:
It is a legitimate reason to comp tickets in the run-up to opening night to industry insiders, influencers, and other folks that can help drive future sales.
But there is a fine line between being wise and undermining your brand equity.
What comp tickets won’t help with?
In my time, I’ve never seen comp tickets make a bad show sell better.
I’ve also never seen comp tickets magically elevate a performance where you increased attendance 20%+ and all of a sudden the evening was magical where before the comps the performers were not excited because the house was selling poorly.
On the other side of this, comp tickets are better than artificially low prices because of the pricing concept called “reference price”. You see this a lot in college athletics the last few years where tickets are artificially low in the misplaced belief that people will experience a college football game at a cheap price and be overwhelmed with the experience to the point that they’ll come back and spend any amount of money to go to a game.
Never really seen it happen in practice.
Instead, what I see regularly is something is sold at a low price, people enjoy it but expect that the price is going to be that same price going forward.
Meaning that you’ve reset the reference price at a much lower number and now will struggle to ever get it back to a reasonable price for the value created…without lots of pain which most businesses don’t have the stomach to suffer.