Summary

Richard Howle, a ticketing consultant, shares insights on the principles and practices of dynamic pricing in the live entertainment industry. Howle explained that dynamic pricing is a fundamental economic concept involving both upward and downward price adjustments, not just price hikes. He discusses the complex process of setting initial ticket prices, which often involves guesswork a year in advance. The conversation covers the emotional psychology of ticket buying, the importance of balancing revenue with accessibility, and the misconception that ticketing companies, rather than artists and promoters, set prices. Howle used examples from his extensive career, including his work on ABBA Voyage, to illustrate how pricing strategies are used to manage demand, sustain long-running shows, and reward loyal fans.

Key Points

  • Dynamic pricing was described as a standard and long-standing retail practice that is fundamental to the entire economy, not just ticketing.
  • It was emphasised that dynamic pricing involves both increasing prices in response to high demand and, just as importantly, decreasing them to stimulate sales during quieter periods.
  • The initial setting of ticket prices for a new show was often characterised as "guesswork," done up to a year in advance with limited information about the final product or future market conditions.
  • The psychology of the ticket buyer was highlighted as a critical factor, noting that ticket purchases are often emotional and tied to special occasions. It was also pointed out that some consumers perceive the most expensive ticket as the "best."
  • Howle clarified that artists and promoters, not ticketing agencies like Ticketmaster, are the ones who set and control ticket prices.
  • He explained that maximising revenue during peak periods (like Christmas) was essential to subsidise lower-priced tickets at off-peak times and for accessibility schemes, ultimately helping a show's long-term financial viability.
  • Fan presales were presented as a key strategy to reward loyal fans by giving them first access to tickets at the lowest prices before any potential dynamic increases for the general sale.

 

Transcript

Transcripts are auto-generated.

 

Kiran Kapur, Host (00:01):
Hello and welcome. Today we are in the exciting world of dynamic pricing and ticketing world.

Richard Howle, Founder of RH Insights (00:07):
As long as there's been ticketing, as long as there's been any retail, there's been dynamic pricing. We live in a dynamic pricing world. Our whole lives are dictated by dynamic pricing. Our whole economy is based on dynamic pricing. And the crucial thing about dynamic pricing is dynamic pricing isn't just upwards pricing, it's downwards pricing.

Kiran Kapur, Host (00:24):
And I'm delighted to introduce Richard Howle, who is the founder and director of RH Insights, which is a ticketing consultancy for the live entertainment industry. Richard has worked in ticketing for 27 years on some of the biggest events in theatre, music, sport, and exhibitions. And immediately prior to setting up RH Insights, he was responsible for ticketing at ABBA Voyage, which sold over three million tickets in its first three years. Richard, I know when I was reading your biography, I've been to a number of the things that you've done, the tickets on, not least walking with dinosaurs, which I thoroughly enjoyed at the O2 Arena. So you have definitely worked on some big household names. You've worked on Billy Elliot, Matilda, Warhorse, as you said, up ABBA voyage, walking with dinosaurs, but you cover theatre music, arena shows, and sports. So it's quite a wide remit that you've got.

Richard Howle Founder of RH Insights (01:15):
Yeah. Yeah. I mean, I've been very lucky in my career to work on a huge range of very popular stuff. And it's something I feel really lucky about. I work on something that gives people pleasure and joy and happiness. I could be selling double glazing or insurance or doing something miserable. So I'm really, really lucky to work in the industry that I work in. I really enjoy it.

Kiran Kapur, Host (01:38):
Yes. And you've described it as quite a sort of emotional ... It's an emotional spend buying tickets. It's something that we do on special occasions or for because we are really, really excited about going and seeing something. So there's quite a big emotion in the work that you do.

Richard Howle Founder of RH Insights (01:55):
Absolutely. If you think about it, going to a concert or a theatre show is an emotional event. You are doing it as a special occasion most of the time. You are going on a first date or a birthday or a wedding anniversary or even to spend time with friends you haven't seen for a while. So it is an emotional experience and the event you're going to see, you're creating memories. And so people get very passionate about live entertainment ticketing, probably more so than they do any other form of retail.

Kiran Kapur, Host (02:26):
You don't see the same emotion about trained tickets being sold dynamically, but you do definitely hear it about live events. We will come onto that. Can you just tell me a little bit about your background and RH Insights? You've worked in this industry for such a long time.

Richard Howle, Founder of RH Insights (02:43):
Yeah. I mean, I started off answering telephone calls, selling tickets for theatre in the call centre back in the days when people phone for tickets. And actually that gave me a real insight into the customer psychology of buying, really understanding the thought process that people go through when they buy tickets. Sometimes people would ring up and they wouldn't even know what show they wanted to see. They just had a special event coming up and they wanted to go to a theatre. And then kind of talking them through what the different prices were and where the different seats were, et cetera, et cetera. I really got an understanding of how people bought tickets. And I kind of mourn those days really for people coming through my industry now because they don't get to experience that because those same thought processes still happen, but they happen at the end of a keyboard.

(03:29):
So from there, I moved on and worked in some of the biggest box offices around the West End and then moved on to various different kind of roles within ticketing. Then I started working for a marketing agency as the head of ticketing. And that sounds a very strange thing for a marketing agency to have ahead of ticketing. But what we were very much doing was we were linking ticket sales to our marketing. And that sounds like an obvious thing to do, but back in the early 2000s, theatre marketing was about putting posters up or adverts in the Sunday Times. And what we were trying to do at the agency where I worked was really try and make our marketing accountable to the results, the ticket sales, and also helping direct that marketing campaign based on what we could see from the ticket sales. So we may look six weeks in advance and see, well, that week is below where it normally is.

(04:21):
So let's focus our campaign into there. Or conversely, that week is way ahead of where it should be, six weeks out. So let's hold back our spend there and save it for another time. And then doing that, that was helping our producers, which were primarily theatre producers, understand the world of ticketing. Ticketing is a very complex retail operation. And what I was doing there was really helping our producers guide their way through the complex kind of world of ticketing and helping them make the right decisions about pricing, about setup, about distribution, and advising them about the best way to sell tickets. And then it grew and grew and grew. And then, I mean, if I won my whole career CV, I then went on to work for Andrew Lloyd Weber's theatres, where they were a crucial point about what to do with ticketing. And we made the decision to in- house ticketing, it had been done by a different company.

(05:14):
And so I set up a ticketing division within there. And then I went off to Birmingham, to the NEC, where they had their own ticketing agency. And the ticketing agency there not only serviced the NEC venues, which was the National Exhibition Centre, but also the two arenas in Birmingham, but they also operated as a national ticket agency selling tickets for events up and down the country. And we worked on things like the RHS, so the Chelsea Flower Show, Krufts, the Lawn Tennis Association, British Athletics, a massive wide range of things. On one day, I went to the knitting and stitching exhibition in the morning and then went off to a festival in the afternoon. Brilliant. It was really, really varied. And then as you say, moved to ABBA voyage, which was a really exciting project if anyone hasn't seen it. It is fantastic. The first time I saw it, I saw it very early on and I just came and I went back and said, "This is the future of our business." It is a sensational product and it was a great show to work on and hugely successful.

Kiran Kapur, Host (06:19):
So I think what I'm noticing from that is you've got events that are sort of, in your experience, you've done events at a one-day event. So I assume the knitting and stitching show, though it sounds fascinating, was a single event, but you've also got things like ABBA voyage that go on for years. Correct. So is the way that you look at the ticketing different, the way that you do the pricing different for those?

Richard Howle, Founder of RH Insights (06:41):
Yes. For long-running shows, there is a different discipline to doing one-off events and you are looking at pricing of the lifecycle of ... Well, it's difficult to look at a lifecycle of a show if it's running for years and years, but you're looking at it over the next quarter or the next six months or the next year, and you're working through, and year one is different to year five. So yeah, there is a different discipline to doing eight shows a week, 52 weeks of the year in one place. There is a different discipline to doing that than to doing a tour that's giving one venue at one date, another place, another day, another place another day. So yeah, there are different disciplines to that and you do approach them differently.

Kiran Kapur, Host (07:21):
I mean, obviously the most important thing about ticketing is it's the point where the company actually makes the money. We often in marketing overlook the fact that we actually need to make, as we get very excited about all the sort of exciting things we can do in marketing. Actually, physically, you have to cover your costs. And of course, you've got fixed costs and variable costs and they need covering. So where do you start with ticketing prices? Do you start with a psychology of what the market will stand? Do you start with the costs or is that too simplistic?

Richard Howle Founder of RH Insights (07:49):
I mean, just to pick up on that point, I always say that ticketing is the execution of marketing, and they aren't separate disciplines. They are very much intertwined. In terms of how you set prices, well, there are a number of different factors. The first one is how much money does the promoter, the producer need to make, which I was actually find really ... That's a reality. It's not the way you should do it. It really should be how much money can we make and then a budget set to that. But it's never done like that, much to my frustration. I'd much rather producers and promoters came to me and said, "What do we think we can make?" And then they set their budgets to that, but usually it's done the other way around. So that is the primary, how much money do we need to cover our costs?

(08:30):
Then where do we want to position ourselves in the market? So we're working on show A, and it's pretty similar to show C and D. And we want to position ourselves within that market. So want to show C and D pricing so we can help the audience understand what the kind of show it's going to be by our pricing. Is this a big top dollar world-class musical or is this something that's a fringe kind of show? Setting the pricing helps set the benchmarks. And then we are looking at what kind of audience is going to come, when it's opening, how long it's running for. There are all sorts of different factors that are coming into it. Do we want to make pricing a selling point? Do we want to have an entry point that's attractive that we can lead on in our advertising? So there are loads of different factors that come into how we set pricing.

(09:21):
Ultimately though, it's all guesswork. We are often pricing shows a year in advance before the first performance. Often people who set pricing are the first people to work on a show. We are looking at pricing before a post has been designed or even a director's been selected to direct a show. We often even don't really know what the product is we're selling. So we're having to make guesses as to what A, the show is going to be and B, what the market is going to be in a year's time when the event's happening.

Kiran Kapur, Host (09:55):
Wow. I don't think when one sits down about ticketing, and I mean, my only experience of this is running amateur groups, where basically it's a single price because you're basically going to get mom, dad, and some friends along, and that's about it. So with something like ABBA voyage, it was world-beating, it was new. It clearly needed to excite both an audience of people who maybe grew up with ABBA, an audience that understood ABBA from some of the films and a newer audience. So where do you even start with all of that?

Richard Howle, Founder of RH Insights (10:27):
Well, you've also got to remember that ABBA voyage. No one knew whether it was going to work. No one knew whether anyone would be interested. No one knew whether the show would be any good. So it is all guesswork. Now, I wasn't involved in ABBA when they first went on sale and when they first set their pricing, but obviously, I know the people now that were making those decisions, and it was a bit finger in the air. It's like, what do we think the market's going to bear? What do we think? And it wasn't until the show opened and the word of mail got round. I mean, when they went on sale, the sales exploded and it took everyone by surprise. The sales were record-breaking when it went on sale. But then still, until that very first time getting it in front of an audience, it could be a complete flop and you may not sell another ticket. Once they knew it wasn't that, once they knew the audience liked it and word was getting around, then that gave us a chance to review pricing, although the first six months had been sold out.

(11:24):
So then we are working for, okay, so that's up to, we're there. What are we going to do for pricing for next year? Again, you're working a year in advance, and how can we adjust our prices based on what we know from the guests that was made 18 months ago before we went on sale? We're trying to make sure you are covering your basic costs and needs and also building in profit, but also you are trying to make sure that you're not pricing out the market. It's a real, real balance.

Kiran Kapur, Host (11:52):
So I'm very intrigued by the psychology of pricing. You have a lovely example, I believe, of not being able to sell tickets at 250, but being able to sell them at 500 pounds. And that just seems so counterintuitive.

Richard Howle Founder of RH Insights (12:04):
This is a story that a producer told me that he had some 250 pound tickets that he couldn't sell. They were in the middle of the store. There were like six of them. So in order to make them look more attractive, he priced some seats around them at 500 pounds just to make the 250 pound ones have greater value. And he didn't sell the 250 pound tickets, but he did sell the tickets at 500 because there are a certain sector of people who want to buy the best and they perceive the best as being the most expensive. Now, essentially the seats were all the same. They were all next to each other. They didn't make any difference, but they just like, "I just want the very best. Get me the very best tickets. What are the most expensive tickets? I'll buy those." And not everyone's like that, obviously, but there was a certain sector of people who just will pay the top dollar because they believe paying the top dollar, they're getting the very, very best.

Kiran Kapur, Host (12:55):
So let's talk about the psychology of fans, because one of the issues about dynamic pricing and ticket pricing is that we've all heard the stories of people not being able to book. And I know you had nothing to do with Ticketmaster or Oasis, but that's when I sat down and told people I was going to do this talk, that's the thing that came up. So as I understand it, you look after the fans because you want those to continue, so they get slightly different pricing.

Richard Howle, Founder of RH Insights (13:18):
Well, to be clear from the beginning, it was widely misreported that there was dynamic pricing at Oasis. There was no dynamic pricing in place for Oasis. All the prices were set and fixed. And Ticketmaster, like any ticketing company, does not set the price for any events. The promoter, actually, the artist, the band management set the prices.

Kiran Kapur, Host (13:41):
Fair comment.

Richard Howle Founder of RH Insights (13:42):
The ticketing companies take the fall for that, but they don't make those decisions. And Ticketmaster don't send ... Just to defend Ticketmaster, I don't work for them, never have done, but they don't make any decisions about pricing. They don't change any prices that they haven't been instructed to do. So Ticketmaster took the fall and dynamic pricing wasn't the issue on that. There were number of technical issues with that and people misunderstood because they were in a queue and because of the technical issues, they saw that the ticket prices were for this, but by the time they got onto the site, those tickets had sold out and there were other ticket prices available. So they thought that they were going to go on and get a ticket for the cheapest price, but those cheapest price tickets had already been sold.

Kiran Kapur, Host (14:28):
Which is interesting from, again, back to the psychology of pricing and the person sitting there going, "But I've been cheated" in some sense because that's how they felt. So let's talk about real dynamic pricing where you're actually pricing things. And is that to sort out supply and demand? So tickets on a Monday might be cheaper than tickets on a Friday or a Saturday? Is that what's in your mind when you were pricing those?

Richard Howle, Founder of RH Insights (14:51):
Absolutely. And the other thing about dynamic pricing, it's become the phrase of the moment, but dynamic pricing is as old as ticketing. There's always been, as long as there's been ticketing, as long as there's been any retail, there's been dynamic pricing. We live in a dynamic pricing world. Our whole lives are dictated by dynamic pricing. If we look at what's happening at the moment, the oil price is going up dynamically, and that affects everything else that's going to happen in our lives. So dynamic pricing isn't just restricted to ticketing. Our whole economy is based on dynamic pricing. And the crucial thing about dynamic pricing is dynamic pricing isn't just upwards pricing, it's downwards pricing. And I have certainly priced tickets lower in dynamically than I have higher. And that's really, really important to remember. And people get very emotional because they think that prices are going up and they're being exploited, but actually they don't get upset when they get a discount or they see an offer or it is cheaper on a Monday, but that is all examples of dynamic pricing.

(15:54):
And because in an ideal world, when we set the prices a year out, we would know exactly what the whole macro economic situation was going to be. We'd know perfectly what the demand curve was going to be and we'd set a fixed price, but we don't. And we have to be dynamic. We don't know which price bands are going to sell, which performances are going to sell. And we have to be dynamic and we have to make sure that we are balancing revenue and supply and demand and making sure that A, we are filling the seats because no one wants to play to an empty auditorium, but also we're making sure that we're maximising the revenue. And sometimes the easiest way to maximise the revenue is actually to drop prices because we can sell more tickets. So it is that balance up and down between, if we stick with this price, we are only going to sell at 50%, but actually if we drop the price by 10%, we'll sell 100%.

(16:51):
So actually we're going to make more money. Live entertainment is extremely risky business. People lose more money than they make on it. So we have a duty to make sure that where there is an opportunity to make money, that we maximise that. So actually, if a particular performance or a particular show or a particular price band is showing high demand, then we will put the price up. And actually, do you know what that compensates for those performances where we had to drop the prices? There was a show I worked on a few years ago and it opened just before Christmas, opened to good reviews and the sales were really strong for Christmas, as you would expect. It was a family show. And I remember sitting down about, I don't know, three or four weeks before Christmas and changing in that Christmas to New Year week, which is the peak week in theatre and moving every single remaining ticket up to the top price.

(17:46):
And that might seem outrageous to some people, but actually there were only, I don't know, a couple of hundred tickets left. Let's imagine someone buying, everyone buys two tickets. So I only needed to find a hundred people who were going to pay those prices.

(18:01):
Now, all the other people who were looking for tickets, we had tickets at much lower prices in January, February, and we knew that January was going to be a difficult month. So we needed to make our money in those really peak weeks in December. And I make no apology for doing that because actually what that does is that helps sustain the show and make it last longer and ultimately gives more people the opportunity to see it at a reasonable price. Yeah, if you wanted to go over Christmas, you had to pay top dollar, but actually if you waited a few weeks, you could go and see the show really at a very reasonable price.

Kiran Kapur, Host (18:32):
It's interesting, isn't it? Because on the other hand, arts organisations often want introductory ticket prices. So quite often if you're under 25 or you're unwaged, you get them cheaper. So presumably you have to factor that in as well because those are discounted tickets.

Richard Howle, Founder of RH Insights (18:46):
Exactly. And in order to afford to be able to do that, you have to make the money elsewhere. It's not just subsidised theatre that wants to do that. And a commercial theatre wants to do that. A few years ago, I did a breakdown for the stage newspaper about pricing a house and really dividing up where the money goes. And at the heart of it essentially was the show cost this much per week, the gross potential of this much per week. So on average, we need to sell tickets at this average ticket price. So I created a fictional show, and this was a few years ago, so the prices probably are inflated now. But at that time, I calculated that to break even, if we were to sell at 80% capacity, because nothing necessarily sales at 100%, you'd be silly to price a show that it was all going to sell out all the time.

(19:35):
So at 80% capacity, the average ticket price would have to be 27 pounds. So any ticket that was sold for under 27 pounds, the producer was subsidising. So if you think about those tickets in the upper circle that were 19 pounds or the school group rate that we were doing at 25 pounds, the producer's subsidising those because the breakeven price was 27 pounds. So in order to make up for all those tickets that were being sold at lower prices, the higher prices have to take the weight of that.

Kiran Kapur, Host (20:06):
I suppose the point is it comes back to what you said at the beginning where quite often you're booking because it's an anniversary or a birthday or a date. So then you are booking for a particular time, and that's the price that you see. And maybe you don't always go, "Well, actually, if we went the following week, it would be cheaper the following month." And that's back to your psychology.

Richard Howle, Founder of RH Insights (20:27):
And actually, I didn't answer your earlier question about rewarding fans. Often, particularly for popular shows, the best time to book is early in advance. That is when the price is going to be at its cheapest. And as an industry, we very much want people to book as far in advance as possible because it gives us surety and it helps us understand what demand is and it helps us control our marketing spend. So actually making sure that prices ... So for those people who have got an anniversary and want to see that show, my advice is you know you're going to want to go on that date book as early as possible, because if you leave it late, the chances are the prices are going to go up because demand increases if it's a popular show on a popular date. So there are always opportunities and it never happens that tickets go on sale and the prices immediately go up.

(21:17):
Tickets go on sale, you assess them, and then you make adjustments for them. So that's why when we talk about fans getting the best price, if a concert goes on sale, there's usually a fan presale. The prices don't change during that fan presale. There may sometimes be a decision that actually, do you know what once we put onto general sale, looking at demand, we've only got these few tickets, we are going to change the prices, but that fan presale is where you are going to get the cheapest tickets for a big popular event.

Kiran Kapur, Host (21:45):
And that's presumably because you can, partly your rewarding fan loyalty, but sorry, the producer of the company is all rewarding fan loyalty, but also because they might buy other things like drinks and beverages and food and merchandise.

Richard Howle, Founder of RH Insights (21:56):
Oh, and particularly music artists, they want their fans to remain loyal and they don't want to exploit their fans. ABBA set some very clear benchmarks and guardrails about pricing because when the ABBA voyage first opened and sales were absolutely going through, I've never seen sales figures like it. We could have been selling those tickets for 700, 800, 900, 1000 pounds each. ABBA, the band, did not want that. They did not want to exploit their fans, which is absolutely right because they're fans and they don't want to exploit them. And most artists feel the same about their fans. They don't want to exploit their fans because it's an ongoing, it's a lifetime value relationship. If their fans feel as if they're being exploited by artists, they're not going to buy their next record or go to the next show or buy their next item of merchandise. It is a relationship that artists have with fans.

Kiran Kapur, Host (22:50):
Do you know what? I've never really thought about it as being the ... It is the classic lifetime value market, isn't it? It's the best example you can have. I think you've sort of answered this because you're so obviously passionate about pricing, but this is an absolute final question. What made you go into pricing as the career? You started in marketing. You could have gone any direction. You could have been creating posters. What was it about the pricing side that called to you?

Richard Howle, Founder of RH Insights (23:15):
WelI, I didn't start in marketing. I started in ticketing and I remained in ticketing all the way through my career. It's just I worked for a marketing agency where I saw the synergy between ticketing and marketing and the importance of how those two work together to help sell shows. And I could never design posters because I'm a terrible artist. No, I started in ticketing because I wanted to be a theatre producer, but I didn't really understand how ticketing made its money. So I was working front of house in a theatre and I asked my theatre manager and how do I get into ticketing? Because I wanted to find out about that. And there's something about ticketing that once you're in it, you never really leave. I never really intended to stay, but 27 years I'm still in ticketing. And it's not just about pricing. I wouldn't say that I'm in pricing, pricing's one element of ticketing.

(24:07):
It's a very important element of ticketing. So it's ticketing that I'm interested in, not pricing. And it is an endlessly fascinating industry. I learn something new every day. The industry is constantly evolving. There are different shows, different productions, different audiences, different technologies. It's an endlessly fascinating industry that's always changing. And ultimately, although ticketing is often seen as the unpopular part of the industry, we are the gateway into it. We are helping ... There's nothing more joyful than being contacted by a customer who said, thank you for helping me get in to see ... I've waited 20 years to see my favourite artist and you've helped me do it. Those do come in. They're quite right. Normally it's you absolutely waited 20 years and I can't get a ticket. So when you hold onto those moments of joy.

Kiran Kapur, Host (25:06):
Richard Howle, founder and director of RH Insights, thank you. Your passion shines through and it's really come across. Thank you so much for your time and insight.

Richard Howle, Founder of RH Insights (25:15):
It's a pleasure. It's been lovely to talk to you.