To what extent do you use the price to select customers or certain target groups? Do such considerations play a role at all?

The utilization is important and is also in the foreground. In the musical, the price is not the only decisive variable, because there is basically no direct competition to the musical selected by the visitor. The immediate influence of the price on sales is limited – a halved price does not automatically generate significantly more ticket sales. At the peak, prices have already gone up, and we have a new price category “Premium”, which is very popular. However, it is difficult to differentiate target groups based on prices. Of course, there are also student prices and school prices. But we differentiate more about the seat quality. Customers who book the best seats do not have common sociodemographic characteristics, as we find them in target group marketing. There is rather a kind of musical affinity that determines the price willingness. It is interesting in this context, for example, that families tend to pay more attention to the seat quality than to the price.

What are the most important factors that play the biggest role or have the greatest influence in setting prices?

The seat quality. Historical references are the starting point for our pricing scheme. Immediately after the start of sales, we react and adjust the pricing system. Demand is ultimately decisive for our pricing. The demand varies by weekdays depending on the audience of the show, whether it is families or pensioners. During the holidays, however, the weekly price scheme completely dissolves: during the holidays it is always Saturday, so to speak. Late bookers tend to pay more, cheap tickets are more likely with more lead time.

Do you rely on last minute tickets?

No. As in many other industries, we try to avoid last minute tickets. Offering bargains at the end doesn’t make sense for us. On the day of the performance, the demand for each show is highest. The last 50 seats are single seats that are left over. But it’s okay if 50 or 100 single seats out of 2,000 remain unsold. We can also vary the capacities depending on demand by releasing the ranks. 30 – 40% of the total seats are variable, they may also go on sale later.

What is the spread of prices between the cheapest and the most expensive ticket? Has this price spread changed in recent years?

At Stage Entertainment as a whole, the factor is 8, for a production or show like “The Lion King” it is 3 – 4, in a performance about 2.5 – 3. The price spread has widened with the introduction of the premium price class. These are now about 10% of the seats sold. We are also variable in the price categories to some extent. This then becomes the inventory game. On Broadway in the USA, this game with capacities is much more extreme.

The demand for “The Lion King” has not declined for years

Have you created new price categories? How have these new categories proven themselves?

Yes, we have indeed created the premium category, which has found very good acceptance. In individual cases, we have also set lower price points, e.g. we have created a cheaper one with price category 5 for “Aladdin”.

Does the life cycle of your – extremely successful – product “The Lion King” play a role in the pricing strategy?

There is no life cycle for “The Lion King”. The demand is stable, it does not decline over the years. With other shows, this plays more of a role, you react a little with the price, but the price elasticity is limited: you do not generate additional sales through price reductions. So we have a limited effect of the price.

How is pricing organized? How large is the team, for example, and who do you report to as head of the pricing team?

Our department, which I am responsible for, is called Yield Management. This is more the complete marketing analysis with 15 employees. This already shows that the topic has a high priority. As head of this department, I report directly to the Germany boss of Stage Entertainment.

How do you document the experiences you have had with certain pricing strategies? Are these experiences transferable to the next fiscal years at all?

Everything we do is based on historical information. All price changes are recorded in a relational database, and we continuously document the effects of all price changes. We have written a pricing framework that now spans 50 pages, in which all our pricing experiences from all our European markets are recorded. This is our price strategic framework, and it is constantly supplemented with newly gained insights. We also value the exchange of experiences with other companies in our industry. These are then private theaters like the Schmidts Theater in Hamburg, ticket system providers, but also completely different industries like Bundesliga clubs or publishers. We are happy to share the mechanisms behind our pricing.

Do you work with price-sales functions and price elasticities?

No. We do not report price elasticities as a key figure. But we have corresponding experience values. For example, we know that for comparable dates (e.g. the afternoon show on Tuesday and Wednesday) 3 euros make a big difference in demand. However, raising or lowering the price by 1 – 2 euros across all performances of a show has almost no effect on sales.

What kind of IT systems support you in pricing?

We have a relational database, and we use Excel very intensively. Based on this, we have developed our own tools. This is completely sufficient. We do not use third-party systems. If you have sold 100 million tickets, then in terms of data volume, that’s not that much. You don’t have to work with artificial intelligence.

Is there a pronounced price controlling at Stage Entertainment, e.g. in the form of analyses and reports for the management?

Yes, there is, e.g. when new shows go on presale. Also with more radical changes in prices or with the implementation of new corner prices, this is prepared and commented on for the management accordingly.

What will pricing at Stage Entertainment look like in 3 years? Will there be fundamental changes?

No, there will not be. It’s ultimately about the seats in 400 shows a year in 5 or 6 price categories and several price levels, which we use for different pricing according to weekdays, times of day, holidays or vacation times.

Will there be dynamic pricing with you, as we know it from Broadway?

No, we will not do that. Price changes do not have to be made within a few minutes. It’s enough if we change the prices the next day. And in the end, there are no more than about 10 price changes a week across all shows. We usually do not sell more than 5 tickets a day for a specific price category of a performance. So a second-by-second dynamic pricing would be exaggerated. This also means that we do not move towards individualized pricing. Of course, individualized prices are theoretically correct and optimal, but with 2,500 tickets per show, you don’t need that. By the way, we know from Broadway, where dynamic pricing is used, that the system only makes a price proposal, which is not implemented automatically. There, too, the prices have to go through three manual authorization steps.

Professor Riekhof: Thank you very much for the interview!

In this sense, I wish you much success in gaining knowledge and possible pricing adjustments in your company. Will we see each other on September 20/21 in Hamburg at the next Pricing Seminar?

Your Prof. Dr. Hans-Christian Riekhof