The hottest ticket in town may be “Dr. Seuss’s How the Grinch Stole Christmas,” where the best seats will set you back $75. Wait, no. It’s $95. Nope, $90.
What gives? Children’s Theatre Company uses dynamic pricing, which springs from the law of supply and demand. The strategy began with the airline industry, where consumers have had years to get accustomed to the idea that the person next to them probably paid a much different price.
Now, it’s spreading to Twin Cities theaters. Ordway Center and Hennepin Theatre Trust use it, as does the smaller Illusion Theater. Moviegoers may have to adjust, as well: Regal Cinemas is testing dynamic pricing at some theaters during the busy holiday season (though apparently not at its Eagan location).
“It all goes back to the concept that, at 7:35, an empty seat is suddenly worth nothing. So, what are the opportunities that exist for pricing shows dynamically, both up and down?” asked Ordway President Jamie Grant, who would like to put a butt in every one of those seats.
Theaters with popular shows and a fixed number of seats can’t increase supply, but they can take advantage of a show’s popularity by raising the top ticket price. When “Grinch” single tickets went on sale in June, that top price for about 40 primo seats was $75 for the 2 p.m. Saturday matinee Dec. 12. It rose to $90 by Oct. 31, then $95 a week later. Within a few more days, all of the top-price seats were gone.
The highest CTC has gone is $95, for holiday shows. “West Side Story” at the Ordway zoomed to $125 last spring, and some dates for its upcoming “Annie” are already there.
But dynamic pricing isn’t just there to annoy patrons willing to pay big bucks to see “Hamilton” on Broadway or the Vikings take on the Packers (the Twins and Vikings both use dynamic pricing, too). It’s also a tool to inform buying choices — and steer people to cheaper seats.
“If you’re looking for a ‘Grinch’ ticket and you go to the site, you hit the pricing guide and it will tell you that weeknights are lower than weekends and it will give you a sense of how to find lower-priced seats,” said Adam Thurman, CTC’s director of marketing and communications.
Some, but not all, consumers are getting the message.
“I think [CTC does] a pretty good job of conveying the information on the site, but I saw someone online who said, ‘I want to take my grandkids but I can’t afford $65 tickets,’ so I said, ‘There is this other option, these $15 tickets,’ ” said Connie Shaw, who has become adept at navigating dynamic pricing as she hunts for ticket bargains. “The resources are out there. People just need to be a little savvy.”
Driven by technology
Children’s Theatre has used dynamic pricing for about three years but became more open about it in the past year.
“Because of the internet and the ability to compare prices on everything, it is now a good thing to be transparent about prices,” said Alok Gupta, an associate dean at Carlson School of Management.
From its beginnings a couple decades ago, dynamic pricing has been driven by technology, Gupta said. Theaters can adjust prices automatically, based on how individual performances are selling, and they have “heat maps” showing which seats are most in demand.
Patrons searching for tickets may find performances marked “limited seating” (on the CTC website) or color-coded (on the Ordway’s site) to indicate the hottest shows, where dynamic pricing is likely to drive up prices.
That sort of inventory information is similar to charts that pop up on airline websites, showing where you can pony up to get more legroom, for instance. But theaters are different from airlines because patrons will almost always get the cheapest seats by buying as early as possible. For instance, CTC’s upper-balcony seats are always $15 — and patrons clearly know this, because $15 seats are scarce for the entire run.
“If you want the best price on ‘Grinch,’ buy now. It’s sort of a pre-Thanksgiving window,” said Thurman, noting that demand picks up after Turkey Day.
The sooner the better at the Ordway, too. Grant said they “reward” early ticket buyers and patrons flexible enough to change dates in search of better deals.
Friday and Saturday nights aren’t always the most expensive, either. “In the summer, weekday nights for some shows are more popular, because people go away on the weekend,” Grant said.
Tuesdays and Sunday evenings are generally the time for bargains at Hennepin Theatre Trust touring productions, said HTT spokesman Dale Stark. “Thursdays are the new Friday,” he added — patrons seem reluctant to conclude the workweek Friday afternoon and head right to the theater.
At Illusion, president Michael Robins said Fridays and Saturdays are costlier than Thursdays and Sundays, but he is keeping an eye on Friday, too: “It has become less of a let’s-go-out-to-a-play night than it used to be.”
Illusion is most likely to use dynamic pricing for its Miss Richfield holiday show, for which demand is always high.
“It has turned into a holiday tradition for some people, but we’re really sensitive about how high a ticket price we want to go to,” said Robins, who put a $50 cap on the show.
Both Thurman and Grant argue that extra revenue from dynamic pricing helps make their nonprofit organizations more accessible to lower-income patrons, through programs such as matinees for schoolchildren and CTC’s Access, which offers scholarships to people who can’t afford tickets.
“ ‘West Side Story’ was the first Broadway production that we made available for school audiences,” Grant said. “That show sold very well for the Ordway, but we made the decision, despite the dynamic pricing opportunities it presented, that some of those seats were going to be 15 bucks.”
Gupta of the Carlson School says dynamic pricing is only going to become more prevalent, even for theaters such as Illusion where ticketing is not as fully automated — perhaps through a third-party clearinghouse like Goldstar.com.
“It’s basically going to take somebody, some entrepreneur, to develop an application that takes into account that a theater seat is a perishable good,” Gupta said. “Maybe people are not willing to pay $50 as showtime draws near, but maybe they will pay $45 and you’ll be able to sell that seat, instead of getting nothing for it.”
A theater fan himself, Gupta said being an expert on economics doesn’t mean he’s always the smartest consumer. Like pretty much everyone, he is dismayed by rising prices, but the ability to search online makes him feel better about paying what he has to pay.
“There are people who spend more time searching for cheaper prices than I do, but I still think I make better decisions and I am happier with those decisions than I was, say, 25 years ago, because I have the information to make them.”