By Angela Terry
Dynamic pricing has been around for years in a variety of industries such as airlines, concerts, sporting events and the list goes on and on. A few air shows jumped on the dynamic pricing bandwagon a handful of years ago, but they have seen greater success in the past two years.
So, what is dynamic pricing? Simply put, it is a ticket pricing strategy that provides discounts for a limited time (monthly, weekly, etc.) AND a limited number of tickets available at each discounted price (quantity).
The first part of dynamic pricing and the easiest to start with is the limited time offer of a discount. When the California Capital Airshow (CCA) began dynamic pricing in 2015, we started by shortening the timeline of ticket sales from ten months to four months. This allowed us to build up demand for the air show by sharing performer announcements and educating our attendees about our new pricing strategy through several emails prior to making tickets available for sale. These emails also developed a relationship with our customers. We told our previous customers 30 days before the June ticket launch that prices would be 50% off the full retail price, the best deal of the year, for a limited time only (approximately two weeks). The goal was to get our customer to purchase and to do it quickly once we put tickets on sale. The strategy worked, with a 98% increase in ticket sales in the first 24 hours of launch.
Prior to the limited time offer ending, we reminded our customers through an email that the 50% off discount was about to expire. This simple reminder email yielded an additional and noticeable bump in ticket sales. After the limited time offer ended, prices increased, but still provided the customer with 40% off the full price. This new limited time offer was valid for the entire month of July (30 days). When August 1 came, the limited time offer became 30% off full price. This pricing continued into September when we offered a limited time offer of 20% off full prices until air show weekend, when tickets went to the full price.
Each time we sent an email, we saw an uptick in ticket sales, with the largest increase coming the last 24 hours of the discount/offer. Many people still waited to purchase tickets which caused them to pay more, but we knew we had given them the opportunity to save.
The limited time offer or discounts can be whatever makes sense for your air show, but make sure it provides savings to your customer; a small discount of only a dollar or two is not sufficient motivation to buy early. The increment of time is flexible, too, but make sure you give your customers a chance to act and your team time to market the opportunity to prospective ticket buyers.
The second part of dynamic pricing and frankly the harder part to implement is to provide a limited quantity of tickets at each price. We all love a discount, but we can’t sell all our tickets at the lowest price. Dynamic pricing allows you to have multiple discounts with a limited number of tickets at each price, maximizing ticket revenue and providing peace of mind that your discount offers won’t cause you to miss revenue budget projections. CCA introduced this element of dynamic pricing to our show in 2021, and it produced an increase in ticket revenue.
Due to the pandemic, CCA had to limit the overall attendee capacity to 50% of a standard year, making it critical to maximize our ticket revenue in every possible way with less tickets to sell. Although our customers were used to limited time offers, they weren’t used to limited quantities. When CCA launched ticket sales in 2021, ticket prices jumped quickly due to the limited quantities at each level. The customers were surprised at how quickly the supply of tickets at each discount level were sold out…and so were we. But by limiting ticket quantities at each discount level, the overwhelming response did not produce unwelcome budgetary surprises.
When CCA launched tickets for our VIP chalet in June at 50% off, there were only 100 tickets available at this steep discount. Once the 100 tickets at 50% off sold, prices went up; for us, 40% off was the next offer. Each time the quantity was met at the discount level, prices went up. This process continued until the ticket type was sold out. The number of discounts and quantity is flexible, but a good place to start is to divide the total quantity (say it’s 400) of tickets over four discount levels. In this example, 100 tickets at 50%, 100 tickets at 40%, 100 at 30%, and 100 20%.
|Headliner||USN Blue Angels||USAF Thunderbirds &
|USAF F-22 Raptor, USN Growler Legacy Team, CF-18|
|Size of event||100% of event capacity||50% of event capacity||40% of event capacity|
|Strategies used||Limited time offers ONLY||Limited time & quantity||Limited time & quantity|
|Revenue||Ticket sales: $964,000||Ticket sales: $ 1.1M+||Tickets sales: $1.1M+|
Shows with several ticket types could see various prices and discounts at one time. For example, when the most expensive VIP tickets are being sold at a 30% discount, general admission tickets might still have a discount of 40%. Although this can be confusing, it also informs organizers on a variety of points, such as what days and ticket types are more popular and if the overall pricing is effective. When tickets are selling at a brisk pace, you may find that you might move through several price levels in a short period of time. That’s your indication that your price threshold is too low and you can increase your ticket prices with confidence at your next show. When ticket sales move slowly through the levels, you may want to re-evaluate a ticket type or potentially take a closer look at your pricing.
Managing limited time offers with limited quantity of tickets is complicated, but working with a great ticket company makes it easy to manage by utilizing their automation technology. Most importantly, you must have a plan and answer these questions BEFORE you launch ticket sales:
- What is your total quantity for each ticket type?
- What discounts will you offer?
- How many tickets will you sell at each price?
- What is your timeframe for each discount?
Asking and answering these questions ahead of time will help your ticket company set up the automation to keep the ball rolling without tedious manual updates. This plan will also assist you when you need to communicate with your customers about the offers. Answering these questions will also help you determine the schedule for your marketing and promotional efforts, including ideas for emails that will resonate with your audience.
Dynamic ticket pricing has changed how the California Capital Airshow sells tickets and, ultimately, our bottom line. Although it was hard to make the initial change, we took a baby step by just starting with limited time offers and regularly communicating with our previous customers. It took years to add the second layer, limited quantity, to the pricing strategy, but — once we did — we saw huge revenue gains. Change is hard, but give it a chance, even if its just a baby step. If the baby step increases revenue, then keep doing it. If it doesn’t, try something else..