Pricing strategies

Pretty much unremarked in the general houha of the COC’s season announcement is a rather interesting change in pricing strategy.  Clearly something had to be done as the switch to a six performance season has consequences.  The COC appears to have something over 7000 season subscribers and a further, say, 3500 select subscribers who buy tickets for five performances.  The five performance package isn’t offered for 2014/15 so let’s assume that group split 50/50 into six and four package buyers for no net effect on ticket sales.  The switch then means a loss of 7000+ ticket sales.  The number of performances has only been reduced by 1 so that means the company has 5000 or so more tickets to sell to single ticket buyers or net new subscribers than last year.  That is, of course, on top of last year’s unsold capacity of around 12,000 seats.  For reference last year’s single seat sales were just shy of 40,000.  So, unless subscription sales rise, single ticket sales per show have to rise from 6,500 to 7,500 (more or less) just to stand still.  That’s actually a pretty tough ask.

coverSo what’s the solution?  As far as I can calculate from the subscription package, single ticket prices are essentially unchanged.  What has changed quite radically is the structure of discounts for subscriptions.  In the past, the value proposition was that subscribers, having earlier access to tickets, got the best seats in each price range plus a relatively hefty 35% discount, except in the Grand Poo-ba Ring. where there was no discount.  The strategy this year is to give smaller discounts as the base ticket price rises.  So, the discount for the best Orchestra seats is 17% and for Ring 3 is 23% rising to 42% for the cheap seats.  Clearly the assumption is that if you can afford a subscription in premium seats you aren’t price sensitive as has been shown with the Grand Ring.  To attract new punters new subscription packages with hefty discounts have been introduced for the traditionally harder to sell seats.  So, the seats at the back of the orchestra and the back of Ring 3 (actually a very good place to be!) are discounted 60% and there is a super value package in the middle of Ring 5 that goes for $169 for six shows.  There’s also a Weekday Rush package that gets you the best available seat on the day for $349.

I think this is actually quite a cunning plan.  It could backfire if large numbers of current subscribers are irked by the price rise (my current subscription seats will now cost as much for six shows as they used to for seven) and opt for one of the value packages but I doubt that will happen.  It’s hard to see single ticket sales being significantly boosted so the subscription strategy had better work!

2 thoughts on “Pricing strategies

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