How to Determine What Ticket Price Would Maximize Revenue
If venues want to maximize revenue—and they need to more than ever post-COVID—they need a more precise way to budget and see their costs in real-time. Figuring out what ticket price would maximize revenue for a concert can make you want to pull your hair out.
Price your tickets too high, and you risk not selling enough tickets. Price your tickets too low, and you risk going in the red and opening the door for scalpers. It’s challenging for even the most experienced event planners.
Finding the optimal ticket price has traditionally been difficult because venue managers and other event professionals don’t have a clear line of sight into all of their costs, overhead, and artist fees in advance.
Spoiler alert: The Excel sheets you’re clinging to just won’t cut it anymore.
How to Figure Out What Ticket Price Would Maximize Revenue
So what ingredients are needed to stir up the secret sauce that gets you the highest ROI on an event?
Unfortunately, the formula is going to be a bit different every time. There are too many variables for that. But understanding and visualizing your fixed and variable costs will help you determine the starting point for figuring out what ticket price would maximize revenue.
Step One: Identify all Potential Costs and Determine Your Breakeven Point
As you well know, several variables come into play when you’re setting up a concert. You must factor in everything, including location, time of year, weather, performers, venue, competition, and marketing.
However you choose to budget, it’s essential to lay out all the costs you anticipate incurring. This total cost will be your breakeven point. If you make less than this amount, you lose money on the event; you’re raking in profit if you make more than this amount.
Having a comprehensive budget is the most effective way to determine your breakeven point and understand the minimum amount of revenue you need to make the event a success.
Related: Concert Cost Breakdown
Step Two: Assess the Number of Seats in the House and Identify How Many Tickets You’re Likely to Sell
Of course, we all want to pack the house and have a sold-out show. But when it comes to determining what ticket price would maximize revenue, you have to be realistic about how many tickets you can sell.
Is it realistic for you to sell every seat if you have a venue that houses 1000 people, given the artist, the location, the time of year, and post-pandemic restrictions? Or is 750 a more reasonable goal?
Once you know the number of tickets you’re likely to sell, divide that total by your break even amount. This will give you the minimum ticket price.
Break Even Amount ÷ Anticipated Ticket Number = Minimum Ticket Price
Step Three: Look at Similar Events
Now that you have your minimum ticket price, you can begin to scale up until you hit what ticket price would maximize revenue. Review the ticket prices and sales for past events similar to the one you’re trying to host to determine the optimal price.
You can look at other artists who have performed in the same venue, as well as different venues the artist you’re promoting has played at before. Additionally, you can look at artists with a similar following and ticket prices they have commanded.
Looking at event history can help you gauge whether the ticket number/price you set in step two is realistic or needs to be adjusted. At the same time, you can get an idea of what ticket prices performed the best in the past.
Step Four: Look at Competitor Events
If you’re doing a small-town America tour where you’re likely to be the only event going on in a fifty-mile radius, then figuring out what ticket price would maximize revenue would be pretty simple.
But you’re more likely to be competing with other events in the area, so it’s a good idea to account for those. Look at the events going on at the same time and the cost of tickets to those events, and what strategies they’re using to promote tickets.
For instance, if you’re looking to put on a concert in Nashville on the same day there’s a Titans game at Nissan Stadium and Brad Paisley is playing Bridgestone Arena, you may have a more challenging time selling tickets to your event. You may want to consider moving the show to a different day or getting the ticket price as low as you can to draw the crowd of people who can’t afford the big-ticket events.
Additionally, it’s a good idea to check for cultural events in the area. If there’s an annual event that gets a lot of traction the same weekend, that may also pull potential fans away from your concert. A great example of this is the Spoleto Festival in Charleston, SC.
Related: Ticketing Platforms: How Venues Can Boost Ticket Sales
Step Five: Identify Strategies that Can Help You Sell Tickets
Now that you have a better idea of your event, it’s time to figure out how you’re going to sell your tickets. After all, it doesn’t matter if you find what ticket price will maximize revenue if you can’t convince people to buy a ticket.
Some tickets sell themselves, but to maximize your profits, you may want to roll out some good old-fashioned marketing strategies. Not all of these will apply to your event, but you never know what can help you pack the house.
- Early Bird Pricing: Offer a sale on tickets when you first release them to the general public. This helps create buzz and word-of-mouth marketing. You don’t even have to go all the way down to your minimum ticket price; you can simply knock off $10-$15 to encourage early purchases.
- Timed Batch Ticket Pricing: Like early bird ticketing, timed batch pricing works by releasing a set of tickets in smaller batches to encourage fans to get their tickets early. With each batch released, you increase the ticket price a bit more to ignite a sense of urgency to buy tickets ASAP.
- Odd/Even Pricing: Odd pricing means you end your price with an odd number, and even pricing means you end it with an even number. Many recommend having the cost of your ticket end with a five or a nine. It makes no sense, but it’s been scientifically proven that prices that end with a nine or a five perform better.
- Bundled Pricing: You can create a bundled ticket option to increase the appeal of the overall ticket price. For example, you could offer a VIP ticket that includes a parking pass, t-shirt, experience, or something else on top of the admission price.
- Partitioned Pricing: If you’re selling tickets online, you’ll want to decide whether to include the online fees in your online ticket price. Ideally, your online ticket price should be the same as buying a ticket in person. Online ticketing lets you collect emails for future event marketing, but showing higher prices that include service fees can dissuade purchases. You may want to take a note out of StubHub’s book and keep your service fees separate from your tickets.
- Tiered Pricing: Offering different ticket prices for different seats can be highly effective. However, whether you use tiered pricing will heavily depend on your venue. If you choose to use multiple tiers, it’s best to stick to three price levels to avoid confusion.
Keeping All This Information Together (and Accurately Calculated)
As you can see, a lot goes into finding what ticket price will maximize revenue. And when it comes to calculating breakeven for an optimal price point, a miscalculation can have dire consequences.
The best thing you can do is invest in software that enables you to streamline your budgeting process and run ticket price scenarios and event projections.Prism has everything you need to maximize your revenue and easily determine which ticket price will give you the most significant ROI. Get started with Prism today.