Info You Can Use: Story and Pricing

Seth Godin posted some thoughts about pricing that are worthy of consideration. The fact this post is about three times as long as his usual posts indicates the importance he places on the topic.

He tackled the concept of substitution which is basically what we talk about when we identify movies, television, Netflix, video games, etc as competitors for people’s entertainment dollars and time.

One of the key elements of pricing is realizing that people have choices, and that substitutes are available. This is more nuanced than it sounds, though, and I want to highlight key things to keep in mind when you think about how much to charge and how people might react.

Marketers make two mistakes over and over. They create average, commodity products and expect that people will pay extra for them. Or, in the other direction, they lose their nerve and don’t charge a fair price for the extraordinary work they’re doing, afraid that people will find a substitute.

This second paragraph that essentially summarizes the situation arts organizations face. Arts organizations are either accused of overvaluing their product and charging too much in the face of substitutes. Or they are accused of setting prices too low leading audiences to expect those prices should be the norm for something that cost five times as much to produce.

Godin addresses a number of factors which impact what price someone will pay. The one I felt was most applicable to the arts was:

Some goods are difficult to understand before purchase and use, and most consumers undervalue them and treat them like commodities

[…]

This leads to opportunity and challenge of marketers who choose to sell something that we don’t buy very often and that we can’t tell if it’s better (or if the story is true) until after we buy it. In situations like this, our instinct is to assume that the thing is generic, a commodity, not worth extra.

Having read this, it occurred to me that as arts attendance decreases there is an increasingly likelihood of arts experience meeting the definition of something that is difficult to understand before purchase and use. As a result, people see it as interchangeable with other entertainment options. To be fair, many elements of the experience are interchangeable, but others are not.

According to Godin, what enables you to sell a good or service at a higher price is if it has a story. The example he used are organic eggs. We are all probably aware of some aspect of the story associated with organic eggs: they are better for you; the chickens are handled more humanely; you support small, local farmers; lack of antibiotics and pesticides; locally sourced means a small carbon footprint in production.

Whether these things are completely true or not can be immaterial. If some part of the story resonates with the consumer, they become more willing to pay a higher price.

However, I think the story for the arts almost has to be more powerful than for organic eggs. When you are in the supermarket already, the story of organic eggs and your image as a responsible world citizen doesn’t have to resonate very strongly to divert your decision from one carton to another. If you are in a farmer’s market, the story and your self image are so self-reinforcing by the surrounding booths, it is actually easier to buy more than you intended.

When you are at work or at home making plans, the story offered by the local arts companies has to be pretty strong if it is going to influence your decision away from your usual activities.

Or at least this is the case for performing arts organizations. Visual arts organizations can benefit from impulse decisions. A couple weeks ago I was chatting with a friend at the front desk of the local museum and about five people came in saying they were in town for a funeral and decided to swing by the museum. Not necessarily the first thing that pops to mind when I go to funerals, but they enjoyed themselves.

In either case, if you do have a story, once people start to involve themselves with your organization, they integrate your story into their lives and it becomes easier for them to decide to do so again.

About Joe Patti

I have been writing Butts in the Seats (BitS) on topics of arts and cultural administration since 2004 (yikes!). Given the ever evolving concerns facing the sector, I have yet to exhaust the available subject matter. In addition to BitS, I am a founding contributor to the ArtsHacker (artshacker.com) website where I focus on topics related to boards, law, governance, policy and practice.

I am also an evangelist for the effort to Build Public Will For Arts and Culture being helmed by Arts Midwest and the Metropolitan Group. (http://www.creatingconnection.org/about/)

My most recent role was as Executive Director of the Grand Opera House in Macon, GA.

Among the things I am most proud are having produced an opera in the Hawaiian language and a dance drama about Hawaii's snow goddess Poli'ahu while working as a Theater Manager in Hawaii. Though there are many more highlights than there is space here to list.

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