Roger Tomlinson

Case Study: A Dynamic Increase in Revenue at the MAC, Belfast

Case Study: A Dynamic Increase in Revenue

at the MAC, Belfast
Roger Tomlinson (Roger Tomlinson Ltd.)
Back in 2011 after the surge of early adopters of revenue
management, the conversation, in the US and the UK, turned to
dynamic pricing and how to make it happen, especially for smaller
venues. That was the challenge that the new MAC in Belfast, due to
open in April 2012, brought to Baker Richards, in a joint
commission with Deloittes, working on their income projections.
The old MAC had closed in 2010, and Aine McVerry, Director of
Marketing and Communications, points out that the new venue was a very different building, so they felt they
were opening without a legacy and with a new brand.
Aine says that dynamic pricing felt right for the new MAC brand, doing things at the cutting edge of
international practice, but importantly being very open and transparent to people up front and honest. It
communicates that we are fresh and modern, with real flexibility, and
people know the rules about our ticket prices.
As an arts venue, there were the expected parameters of needing to offer
accessible seat prices, some discounted tickets for specific categories such
as students and pensioners, and the need to encourage early booking not
just for cash flow but to help focus marketing. As a new venue, with
modern auditoria and great views from most seats, they werent intending
to charge separately for different parts of the theatres.
Relying on their extensive research and analysis, Baker Richards was able
to confirm that for most organisations, there is a core of people willing to
pay the top price for what the audience perceives as the best seats to see
something they really wanted to see; and crucially that where there was

Roger Tomlinson

Case Study: A Dynamic Increase in Revenue at the MAC, Belfast

demonstrable demand a surge in purchases - ticket prices could rise within a reasonable range. Essentially,
if you see seats at a particular price are selling out, you can increase their price and enhance income.
Baker Richards defined a simple pricing strategy that would enable prices to rise dynamically in response to
demand:

Set a range of Standard ticket prices from low to high, 12 to 22 at the MAC, with an agreed number
of seats at each price according to whether demand was expected to be Peak, Mid, or Off Peak
according to day, date and time, moving sales up to the next price when the agreed number is sold.

Set a limited number of specific best seats at a top Premium price on sale from day one, ideally with
added service benefits (in the case of the MAC 22 tickets, with pre-booked booths with waiter
service in the bar)

Part of the original strategy included a number of Take a Chance tickets where the price is fixed low and
customers are allocated into available seats on the day in order of purchase, in order to maintain accessibility
for the most price sensitive customers throughout the sales cycle. However, this was found not to be
necessary and removed from the schedule after the first year.
An example of how the seat prices are distributed in the MAC is shown in this table for the new season (after
twice evaluating and adjusting), showing prices and the sales thresholds at which prices moved up to the
next level:

So in April 2012 the MAC opened in Belfast with a dynamic pricing strategy which was straightforward to
explain to the public, clearly incentivised advance booking, and made sure core enthusiasts could book the
best seats from the beginning, without diminishing the value of those seats or the revenue from them.
Children, students, pensioners, all got discounts.

Roger Tomlinson

Case Study: A Dynamic Increase in Revenue at the MAC, Belfast

The biggest initial challenge was that dynamic pricing only works where there is demand, and in some cases
the pace of sales did not trigger increases. So over the next couple of years as the MAC built demand, and
attenders learned the financial benefits of booking earlier, the inner workings of the pricing strategy were
refined. This fine-tuning alone created a 15% increase in average income per performance.
In order to encourage more early booking and reflect the intended movement of prices, it was agreed that
Standard seat prices would always increase to 15 two weeks before a performance, regardless of demand.
And premium prices were increased to 25 and increased in number reflecting peoples actual seat choice.
Also reflecting peoples seat choice, some specific seats were capped to 17, so not rising to the highest price
you might say honestly matching price to the
experience in a seat.
Whilst always striving to keep it simple, the
MAC also experimented with discounting.
They started out with a 5 ticket for under 25s
but initially found this discounted price was
denting their anticipated income and dropped it
in 2013/14.

It then found this was a

disincentive to this young target segment and

brought it back in 2014/15. More recently a
group booking benefit for 4 or more seats was introduced to incentivise full cars and people carriers, with
considerable success, though it soon became apparent that this needed to be changed to a fixed cash discount
rather than a percentage off in order to limit the impact on yield from top price seats.
In practice what does all this mean? The obvious benefits are that MAC is experiencing much higher ticket
sales income than it projected before opening in April 2012. When demand is there, the dynamic pricing
mechanism works. A key to this is transparency: on-line it is possible to see what the price is for each
performance in a run, and customers seem to respond by booking earlier, flattening the usual curve as
attendance increases over a run, particularly seen with earlier in the run attendances for their Christmas
productions. By August 2015, sales analysis was showing that in the main auditorium Downstairs ticket
yield was up 30% and average income up 36%.
Have there been challenges from audiences in Belfast? The under 25s didnt like losing their 5 tickets. And
some audiences buying on the door for music events by outside promoters were surprised to find ticket prices
higher than they expected, despite the simple explanation in the brochure there is now a clear statement of
the on-the-door price. Have there been challenges for the venue? Despite enthusiastic monitoring and

Roger Tomlinson

Case Study: A Dynamic Increase in Revenue at the MAC, Belfast

action by a fantastic Box Office Manager,

Aine

says

automation

of

the

dynamic

mechanism would have been easier sometimes

high demand has taken tickets before our staff
could move the prices up.
But since April 2012, over three and a half
seasons now, the dynamic pricing strategy
Baker Richards developed has demonstrated at
the MAC that it can work in terms of bringing in
much greater income in response to demand, while maintaining accessible prices. Aine says the funders were
initially nervous about dynamic pricing, a new initiative in Northern Ireland, but in practice audiences were
re-assured by both accessible prices and a clear transparent strategy, which reflected our brand and values;
that may be marketing speak, but it worked in delivering better income for us and satisfying audiences.
As the MAC learns from their audiences specific behaviour, the prices will steadily rise, perhaps faster, as
bookings come in, and income will keep on growing.

For free resources and discussion on pricing in the arts visit www.thinkaboutpricing.com or join the LinkedIn
group: Thinkaboutpricing.