Following the lead of the sports, airline and hospitality industries, the performing arts world is finally, tentatively, embracing dynamic ticket pricing. Both for-profit and...

Following the lead of the sports, airline and hospitality industries, the performing arts world is finally, tentatively, embracing dynamic ticket pricing.

Both for-profit and non-profit organizations are trying out this model of pricing, in which market demand drives prices up or down as the date of an event nears. In the case of live theater, factors influencing price fluctuation may include the pace of sales in general and within particular sections, the show’s or its stars’ audience draw, and even weather and traffic issues.

Factors such as these can work in a ticket buyer’s favor, or not. Using this model, slowing sales in general or in a difficult-to-seat section can lower prices for a show, providing unexpected bargains for ticket buyers. Conversely, high demand due to good reviews, or a change in a leading performer may trigger an increase in a venue’s more coveted, higher-priced seats. The benefits to both promoter and ticket buyer are obvious here, but this type of pricing may also result in frustrated audience members who find they paid much more for their seats than their neighbors. Nevertheless, this model must seem attractive to an industry that has seen season subscriptions drop over the past several years.

According to a recent Los Angeles Times article, a number of theaters have used or are now implementing the dynamic pricing model. The not-for-profit Center Theater Group recently employed dynamic pricing for its original Broadway cast production of “God of Carnage” at LA’s Ahmanson Theater, reportedly to great financial benefit. The city’s Pantages Theatre started using dynamic pricing back in 2007 when the wildly popular “Wicked” hit the stage. Other organizations, like the Chicago Symphony and Pacific Northwest Ballet of Seattle, have been employing the model for several years.

Dynamic pricing has long been a staple of hotels and airlines, which lower prices close to the date of check in or departure in an effort to fill capacity. Also adopting the dynamic pricing model in recent years are sports teams like the San Francisco Giants, Oakland A’s and St. Louis Cardinals, who have inked deals with one of the industry’s leading dynamic pricer Qcue. Just this year, the Anaheim Ducks and Minnesota Twins signed on with another of the leading companies in this area, Digonex Technologies, and its Sports & Entertainment Analytical Ticketing System (SEATS). The potential benefits to the dynamic model became clear last fall when the Giants and San Diego Padres set up a nail biting finale to the NL West Championship. The Giants ultimately won the Championship, with excited fans making sellouts of the final three games of the series and driving up Giants ticket prices across the board.

Most recently, Ticketmaster got on the dynamic pricing bandwagon, this spring announcing plans with partner MarketShare to launch a dynamic pricing strategy for its live event tickets, a move which is seen by many as a shot across the bow to the secondary ticketing industry.

But in the world of theater, particularly non-profit theater, dynamic pricing presents its own unique dilemmas. In what has been seen increasingly as luxury spending in a sluggish economic climate, theaters must balance audience loyalty with attention to revenue streams. Seeing ticket prices for the same seat skyrocket as a show’s date nears could have a chilling effect on consumers, as would seeing prices drop for a ticket one has already purchased. Non-profits face an even more difficult road with the dynamic pricing model, as planned ticket price hikes triggered by demand smell suspiciously of profit. Thus non-profits are particularly charged with ensuring that, while pricing structure has changed, the priority of nurturing the arts, the artists and the community has not.

Possibly in reaction to these concerns, some theaters using dynamic pricing strategies are trying to ensure access to lower tiered pricing. The Times noted that Center Theater Group still reserves a number of seats for its productions which can be purchased for $20. In addition, balcony seating at its Ahmanson shows is not involved in dynamic pricing at all, remaining stable at $42 and $65. The for-profit Pantages seems to be on board as well, retaining its practice of selling some orchestra tickets at $25 for every performance even while its other ticket prices fluctuate with the market.