The Price is Right! Brought to you by Business Intelligence

Today: a brief synopsis of airline flights, breakfast cereals, scalpers, non-profits, and how business intelligence is, of course, the answer.

Pricing.  We are confronted with pricing all the time — making a series of value judgments on the relative worth of the item or service in question. Twenty times a day or more, our brain decides “that is a fair price for a TV” or “that’s pretty expensive for a bagel” or “gee, what a deal on a lawnmower!” 

Some industries seem to have more predictable pricing than others. On one hand, you have something like breakfast cereal, with prices that move based on inflation, commodities and oil prices, but are quite predictable. On the other end of the scale are airline tickets, which appear to be based on a complex matrix of energy prices, carrier competition, holiday seasons, sunspots and unified string theory.  Still, whether it is Corn Flakes or a trip to Maui, you see the price and make a value decision on whether to make the purchase.

Until recently, in the non-profit  ticketing business, pricing has hung closer to the breakfast cereal side of the scale – setting prices once a year, typically by tacking a couple of bucks onto last year’s prices.  Historically, non-profits have seemingly assumed that the value of their art doesn’t fluctuate very much. 

This has begun to change for a variety of reasons. Interestingly, one of the main reasons for the change is the steady rise of the scalping industry. (And it really is an industry these days, to the point of being euphemized from the tawdry sounding “scalpers” to the positively legit “secondary ticket market” as it is now known.)

With popular events, it is now fairly common for the secondary market to make many thousands of dollars a night by simply understanding the inherent value of an organization’s tickets better than the organization does.  If you see the price of a ticket and think “gee, what a good deal,” you can bet that the secondary market sees the same ticket and says, “I can make money on this.”

It was only a matter of time before the non-profits started to wise up and realize they were essentially handing the anonymous scalpers a bunch of their cash. In just the past few years, we have seen arts organizations get out of the breakfast cereal mode and start to recognize the much more nuanced value of their varied offerings. If the show is selling quickly, why not raise the prices?  If you have an unknown soloist, don’t charge the same price as the beloved returning act.

And yet for a non-profit, these pricing decisions are much more complex than their traditional pricing arrangements. There can be literally dozens of dimensions to consider when choosing or changing a price, with no good tools to help make sense of it all. With so many variables swirling around what a customer considers the “right” price, how do you actually make the decision? This is, of course, a great chance for Business Intelligence – taking reams of seemingly disparate and unconnected data and focusing it into actionable insight.

It is with this in mind that JCA – in partnership with the pricing experts at The Pricing Institute – developed a new BI tool called the Revenue Management Application. This revolutionary new application takes an organization’s glut of ticketing data and turns it into a series of data visualizations and reports that pinpoint opportunities to raise prices, change the price scales in their venues, or discount specific areas of the house. The scalpers can infer the relative value of an organization’s product; with the Revenue Management Application you have the facts to ensure that you have an empirical understanding of that value.

Armed with this new application, non-profits organizations around the world now have the ability to use their own data to keep their ticket revenue where it belongs – in their own house, helping to further their missions.

For more information about the Revenue Management Application, visit the JCA Answers website.  For more information about our expert arts pricing partners, The Pricing Institute, visit their website. 

Jacobson Consulting Applications, Inc. provides strategic consulting to the world’s leading nonprofits.