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How theater ticket prices are changing like airline fares

Chris Jones

October 22, 2012

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When the Goodman Theatre announced its prices for its current production, "Sweet Bird of Youth," starring Diane Lane, it listed $89 as the top ticket price for that show, a price that duly appeared in this newspaper. And had you bought your decent main-floor seat for the Oct. 27 performance three weeks ago, $89 is indeed what you likely would have paid. On Wednesday afternoon, there still were tickets available on the Goodman website for that Saturday evening performance. But the top price? $120.

And we're not just talking premium, VIP-type tickets, common on Broadway and for Broadway in Chicago productions. In fact, a far-side seat in the Goodman mezzanine was priced above that previously stated maximum. If you bought at 5 p.m. Wednesday, a perch in EE1 would have cost you $98.

Dynamic pricing — otherwise known as revenue management, progressive pricing or the computerized art of changing a ticket price over time based on actual supply and demand — has arrived with a vengeance in the nonprofit world, even if few Chicago institutions have invested in the sophisticated computer software and arts consultants, like the Target Resource Group, that allow the Goodman (and such institutions as the Kennedy Center for the Performing Arts in Washington) to adopt dynamic pricing with such sophistication.

At the Goodman now, prices not only go up, they also go back down. It is possible for you to call the theater's box office three times during the week, request the same seats and be offered three different prices.

You'd also likely get three different prices if you called American Airlines, of course, or Hilton Hotels or Hertz Rent-a-Car. Indeed, dynamic pricing is so pervasive in the travel industry that shopping around does not necessarily mean trying different rental agencies anymore, but trying and retrying the same agency numerous times, preferably armed with a bevy of different promotion codes.

Even the bleacher seats at Wrigley Field are now subject to dynamic pricing; some Cubs fans would prefer that adjective be applied to the team.

Still, restaurants don't (yet) change their menu prices based on when you made your reservation. And an entree at, say, Everest costs the same at 8 p.m. on a Saturday night, when there is huge demand for your table, as at 10 p.m. on a Tuesday night, when the demand usually would be much lower. Even if you snag the very last table, you don't pay more.

So is the dynamic pricing model the way a mission-oriented, nonprofit arts group should be operating?

Absolutely, says Roche Schulfer, the Goodman's executive director. "When a show has strong demand," Schulfer said, "that allows us to raise additional revenue that allows us to lower prices at other times."

Schulfer made several other salient points. Dynamic pricing, he noted, applies only to single tickets, when the vast bulk of the audience buys lower-cost subscriptions. "You could have bought the entire eight-play season back in August," he noted, "for as little as $180."

He also said that the Goodman, like most nonprofits, is concerned about price sensitivity and accessibility and has a variety of programs offering concessions to certain groups and those willing to take their chances at the last minute.

And Schulfer insisted that dynamic pricing should be seen in the context of "broader technological change," meaning that audiences benefit from instant ticketing, the chance to pick seat locations on their computers and other goodies that didn't exist in the days of ordering by snail mail and phone.

"It's just not the same business," Schulfer said.

Indeed it's not. Dynamic pricing, it should be said, is not the same thing as having different prices for different baseball games in different months or different tiers of seating. When you do full-on dynamic pricing, you don't publish prices at all (indeed, at one point this year the Goodman press releases shrewdly started saying "tickets from …"). Back in the 1980s, the airline People's Express used to print a schedule with the fare from, say, Chicago to New York. So did Southwest. That seems quaint now — and a recipe for airline bankruptcy. Now there is no fare, or, rather, there are thousands of constantly changing, semi-opaque fares. You rarely know where you are landing in the available range and you can't know the future trajectory; getting the best deal can eat up a lot of a consumer's time.

The Goodman is by no means the only arts institution where prices vary: Lookingglass, Northlight, Writers' and other theaters all said they raise prices slightly when capacity becomes limited, as does the Chicago Symphony Orchestra, though they don't change in real time, as can be the case at the Goodman.

But not everybody does it. David Hawkanson, the executive director of the Steppenwolf Theatre, said this week, with conviction, that his organization does not, and will not, use dynamic pricing. Nor does the Art Institute of Chicago raise the admission prices to its special exhibits after the museum reaches a certain capacity or on a day when it thinks demand will be high.

"There are some real concerns with dynamic pricing," says arts consultant Joanne Bernstein, who argues that, above all else, pricing must be seen in the context of giving the audience what they perceive as good value.

"You don't want people to feel like they are being punished because they had to take a business trip and, therefore, had to buy at the last minute. You also don't want people to think that if they buy a ticket for $120 for one show, the next show will cost the same, when in fact they could buy a ticket for $50."

Even the Goodman is not doing full-on dynamic pricing. When asked how high prices would go for "Sweet Bird," Schulfer said that $120 was the agreed-upon ceiling even if the theater got down to one pair of seats that could, theoretically, command far more than that.

More interesting, the Goodman is raising prices based on actual tickets sold, not (as do airlines and hotels) based on perceived demand for a show. Not yet, anyway.

If you try to buy a ticket today on Southwest Airlines, say, from Chicago to Fort Lauderdale, Fla., on Dec. 26 and back on Jan. 5, you'll see fares of $700 or more round trip. That does not mean Southwest has already sold those tickets; it probably has sold just a fraction of its inventory.

But it has sophisticated modeling to know that it likely will sell those seats between now and the departure date, and thus it can adjust prices accordingly.

Sometimes, the travel companies get it wrong. I've learned, for example, that the best strategy for a New York hotel on a busy Saturday is to take what you can, and then check back three days before you go. I did it just last week. Prices had come down. I canceled my reservation and rebooked at the lower price.

Of course, when tickets can't be canceled, you're stuck. And if nonprofits get fully into that level of dynamic pricing, they may well risk a push-back. For now, though, companies like Northlight report little resistance.

"Our audiences understand," said Tim Evans, executive director of Northlight. After all, the prices are only going up five bucks or so. Many people appreciate that arts groups must maximize their revenue when they can, and dynamic pricing helps them do so, say the arts groups that use it.

Still, you could also argue that dynamic pricing has contributed to the oft-discussed squeeze on the middle class. If you were not wealthy, it used to be that you could sacrifice your time and stand in line (or otherwise inconvenience yourself) and get the best concert seats. You can still do that at the Goodman, if there are seats left. But when you stand in line for your favorite recording artist, even at a nonprofit hall, you're more likely to find they're reserved for those willing and able to pay higher prices.

cjones5@tribune.com

Twitter @ChrisJonesTrib