Ticket pricing strategy
There's a lot of hand-waving and mysticism around pricing tickets, but real evidence on what works differs by industry, by event and even by the time of year.
And yet that doesn't mean that there aren't a few trends worth paying attention to...
Choice is good - Have more than one ticket type
Few of these ticket selling tricks will work if you don’t offer several purchasing options. And you should do that anyway, because it’s just a good idea.
Tiering your prices will also let you appeal to customers with different pricing limits, thereby capturing a larger market share. This can be as simple as having ‘early bird’ (to be discussed later), ‘standard’ and ‘premium’ ticket options.
Number voodoo - The left digit effect & the power of 9
Take advantage of the ‘left digit effect’ - a tendency for us to disproportionately favour the left-most digit when perceiving differences between numbers.
For example, which appears to have a larger difference in price?
1) $2.00 vs. $3.99?
2) $1.99 vs. $4.00?
The difference between the prices in example 1 is $1.99. The difference in example 2 is $2.01, so only 2 cents more. Yet most people perceive a much bigger difference in price between them at first glance.
Guess what? Far fewer people will purchase the $4.00 item in 2) than the $3.99 item in 1).
There are some caveats to this strategy. The left-most number is the important one, so if it doesn’t change then the effect won’t be as strong ($12.99 vs $18.99 won’t work as well). The left-digit effect is also more pronounced if the prices are closer to each other.
And what's with ‘9’? For some reason, prices ending with this number sell better, even when the format isn’t $X.99. For example, a jacket that was $65 will often sell better when discounted to $49 than to $45. Weird huh?
You can use these tricks to incentive the purchase of a particular ticket type, along with...
Human psychology - Anchoring
People frequently make decisions based on the first piece of information they receive, called the "anchor". This means that the initial price your customers see will affect their perception of the rest of your listed ticket prices.
Let’s take three price tags as an example:
The different between each these prices is $20 (okay, and $20.01). But if I want people to buy the middle ticket, I’ve set the price of the first one too low. The difference between them looks huge: $29.99 seems very expensive, even though it may actually be much better value than the one listed at $9.99.
Let's increase the price of the first ticket:
The second price now looks slightly more reasonable, right? Paradoxically, you may be losing money by selling on of your tickets too cheaply. The first ticket sets the bar for future evaluations of price, so make sure that you're not dissuading people from purchasing the one that's best for them.
Know your buyers - The early bird catches the biggest worm
Create an early bird discount and use it on your highest value tickets.
Research suggests that higher value ticket buyers are more likely to lock-in their online purchases early and take advantage of these kinds of offers.
Standard tickets are more likely to sell out as the event approaches, so there is no need to discount these even if demand seems low early on.
It also makes sense to apply discounts to higher rather than lower priced tickets.
Firstly because you'll lose less money if as long as they are actually sold. Secondly because research shows that discounting standard and lower value tickets is less effective once their face value has been declared.
N.B. Watch your discounts and make sure that you factor them into your formula for profits. Take a look at this post for more information on how to use discounts strategically.