Posts Tagged ‘Revenue Per Seat’

USING DISCOUNT CHANNELS

April 23, 2015

“Our job is to take the emotion out of discounting” is a line I use when talking with industry peeps about our consulting client, Goldstar. And emotion should never play into your decision to use discount channels to move tickets when making money, reaching an audience, and filling seats is the goal.

At the Pollstar Conference a few months back, a national promoter told me that “if I have to use Groupon or Goldstar, that means I didn’t do my job”. What? Do all of your shows sell-out or are they even projected to? If you are like the rest of us, the answer is no. In many of those cases, there is an audience that doesn’t even know your show is coming to town, so why not use all the tools at your disposal? Once the act hits the stage, every empty seat means $0 in revenue…and not just for that seat.

Shouldn’t we be counting the zeros when average ticket price tells us nothing? We should be measuring revenue per seat like the airlines do. For instance, if the Jim Lewi Band played a 15,000 seat arena and only sold 4-tickets (to my family of course) at $500, the average ticket price would be $500 even though a majority of the house is empty. But by counting your unsold tickets as $0, you find out how much each seat contributes to your bottom line. Based on the example above with a 15,000 cap, your average ticket price is $500, but your revenue per seat is only $0.0333. Revenue per seat tells us what we really need to know.

In music, many tell us of the perception that the show is a dud if you’re listing tickets through a discount channel. The truth, this “perception” is only in the eyes of the business, not the fan. It is an emotional response we give based on protecting the act’s brand and value in the market, but most fans aren’t doing research to find the best deal like they would with other products. Maybe someday there will be a “Kayak for live entertainment” where a consumer can search for the best deal, just not yet. Goldstar, Groupon, Living Social, etc., are all marketing avenues that need a new measurement scale. CPM (cost per thousand people reached) is generally how marketing is measured. It doesn’t apply here as there is an actual sale, so the more tickets sold, the higher your CPM goes. It should be going down.

The only way you will really know is to “test and measure” results. Don’t assume that you are hurting your show or act by discounting (unless it is to your own list) when chances are you are doing the opposite. There is a lot of data to back this up. When done properly, using a discount channel helps move the primary market. If you haven’t tried it yet, you should. Otherwise, you are just guessing…and probably wrong.

REVENUE PER SEAT VS. AVERAGE TICKET PRICE

April 7, 2014

Do you use Average Ticket Price to measure success on your shows?  If yes, please stop, it is a façade.

I (probably like you) have always used average ticket price as a measuring tool.  It is what we learned and it makes sense.  That is until Jim McCarthy, CEO of Goldstar Events did some simple math on a whiteboard and the light bulb went off.  We (concerts, sports, theatre, family, etc.) should be looking at Revenue Per Seat, not Average Ticket Price.

Lets say you and I were playing a show at your local arena and tickets were $500.  We sold 4-tickets to our family members but the rest of the 15,000 capacity room goes unsold.  What’s our average ticket price?

Average ticket price is calculated by taking your show gross and dividing by the number of seats you sold…so your average ticket price in the above scenario is $500 even though the promoter will be eating Cup of Noodles for a while.  Average Ticket Price = gross / number of seats sold.

Revenue Per Seat = gross / total number of seats.  This formula gives you much more accurate data as you are counting unsold tickets as selling for $0.  Average ticket price doesn’t really tell you anything…especially standing on its own.

In music and live entertainment, we talk about moving to a dynamic pricing model similar to the travel industry.  Well, airlines measure Revenue Per Seat while hotels and cruises, Revenue Per Room.  The average doesn’t tell them how full their properties are, just how much they are getting per sale.  It is a number that doesn’t really mean anything.

As the Blues Brothers once said, “we are on a mission from god”.  Our mission is to use revenue per seat versus average ticket price.  Please remember, although we are used to looking at the gross and average ticket, it doesn’t tell you what you need to know.  It doesn’t tell you anything.

Please share this mission with everyone!