What to Charge for Your Digital Performances, According to a Pricing Expert
Sean Kelly, founder of dynamic pricing software Vatic, on what he’s learned from helping companies price their performances throughout COVID-19, and why virtual shows are here to stay
Dance organizations typically price tickets for in-person performances based on a combination of scarcity, demand, production costs and the quality of the viewing position.
But these factors have little to do with how consumers make decisions about online content, as dance organizations learned last year when the entire field had to figure out first how to put their content online and then (after many had already opened their media troves to audiences for free) charge customers for that content.
Indeed, before COVID, most dance organizations weren’t thinking about pricing for online content at all. But now, as it’s becoming clear that digital performances aren’t going anywhere—even as in-person performances restart—having a digital pricing strategy is essential. Dance Business Weekly spoke with Sean Kelly, founder of Vatic, a dynamic pricing software, about how he’s been helping arts organizations price their digital performances, and what he sees coming post-COVID.
How have you been spending your time during COVID?
We’ve been working with clients on pricing for their online content, as well as branching out and helping companies with pricing for educational programs and animation tools. Most recently we’ve been helping clients prepare for reopening, including how to effectively price when capacities are limited, and what to charge when they have both an in-person performance as well as a digital simulcast.
How long have you been in this line of work? I’d love to learn more about the extent to which you worked in pricing for digital events pre-COVID, and some of the ways that non-digital pricing carries over into digital pricing.
I created my first algorithm for managing performing arts pricing in 2009 and since that time I’ve managed pricing for thousands of performances. We launched Vatic in 2018 so we could help a broader spectrum of arts organizations.
The interesting thing about digital events for the performing arts is that prior to COVID, most arts organizations did not even think of this as a viable avenue for delivering on their mission, much less charging money for it. Then with quarantines in place, for many organizations it became the only way they could engage with patrons. At the same time, the revenue models for digital content were mostly subscription-based. But, historically, for the arts, it can take years to cultivate a subscriber. So arts organizations needed a new revenue model for digital that aligned with single ticket buyer behavior.
In our work with pricing digital events we use the same three foundational principles that drive all of our work: It’s not just about raising prices, it’s about finding the right price; you can’t just increase revenue, you also have to sell more tickets; and your pricing should be predictive rather than reactive.
Arts organizations get off on the wrong foot when they immediately assume that because they are delivering content digitally, it is somehow of lesser value. But buyer perceptions of value are more complex than that, especially post-COVID. Everyone who is delivering digital content—including the major players like Apple TV and Amazon, is having to rechart their pricing maps because the world just doesn’t look the same anymore to consumers sitting on their couch. I often hear folks in the arts say, “Well, there are hundreds of options out there for digital content. How could my organization compete with that?” But the reality is that, yes, there are hundreds of thousands of options, and yet we still find ourselves with nothing to watch. The arts fill a niche that for the most part literally has not existed in any kind of meaningful way on broadcast.
The number one thing Vatic wanted to understand during quarantine was: Do patrons think that digital is worth less? And if so, how much less is it worth to them? And in our in-depth study, we found that there was almost no difference. The point here isn’t that everyone can charge exactly what they used to charge for in-person performances, but don’t sell yourself short by thinking that it’s only worth 10 or 15 bucks. What you’re really trying to discover is what your patrons think your content is worth.
Can you elaborate on some of the dynamics you’re seeing as companies start to have in-person performances alongside digital ones?
Organizations that are reopening, but have limited capacity, still have the same bills to pay, and traditionally, scarcity drives higher prices. But, our reality right now is much more complex than that. On the one hand, yes, you have fewer seats to sell, and on top of that, folks have been cooped up for a year, but on the other hand, you may also see consumer hesitancy for social gathering. The only way to understand these competing forces is to analyze your buying trends and see which is having more of an impact. So we work with organizations to understand what patrons are comfortable with now, and in the future. Right now we are witnessing very high demand and low price sensitivity. To put that in plain English—the folks who want to go out and see a show really want to, and they are willing to pay more to ensure they get a seat at the performance.
The extraordinary thing about the past year is just how hard the quarantine has pushed arts organizations out of their comfort zones and forced them to be creative. But not just creative in the way they are used to, creating beautiful art. But, rather, creative in how they deliver that art. And now, they are being faced with another unprecedented challenge, which is how to go back to live performances and, at the same time, hold on to all of those patrons who discovered them through their digital offerings who aren’t able or are unwilling to come in person. And this raises all kinds of fears—that digital will turn out to be a huge waste of time and folks will only want to see in-person performance. Or, counterintuitively, that audiences won’t want to come back to the venue but will prefer to engage digitally. I think the reality is going to lie somewhere in the middle. Especially as the next generations become patrons of the arts, because they expect digital engagement. To them it’s not a “less than,” it is a “must-have.”
What advice do you have for dance companies working on pricing their digital performances?
The first thing you have to be willing to accept is that the value you place on something is not the same as the value that a patron places on it. The only way you can truly understand that is to follow the data. Every time a patron purchases a ticket from you, regardless of whether it is for an in-person performance or for digital content, they are actually having a conversation with you about value—literally, what this program is worth to them. If you test against your assumptions and then use that data to guide you, you’ll be able to find the true value of your offerings.
Rather than addressing it as if digital performances are somehow less-than, think about your online content as simply another way for you to deliver on your mission. One that is currently indispensable for your patrons if they want to participate in your art.
What are your predictions for the future of digital performances, how they’ll fit into companies’ overall programming, and how they’ll be priced?
There are so many examples of organizations who have created online content and seen the extraordinary reach it has beyond their geographic area. These organizations have seen how digital does not take away from their art but actually extends their reach. So even once venues reopen, they’re not going to want to leave those patrons behind. Creating content that can be delivered both live and via streaming will be paramount for them. Our understanding of what to charge for digital content will continue to evolve as organizations learn more about its true value.
Sydney Skybetter is the Director of Undergraduate Studies in the Theatre Arts & Performance Studies Department at Brown University, and the founder of the Conference for Research on Choreographic Interfaces.
