Introduction:
This is the first article on how using behavioral science for event ticket pricing can transform your ticket sales for events. The first article is focused on the process of increasing perceived value and pricing tickets using “anchoring bias” as a pricing tactic. You often hear people use the term psychological pricing to address these issues.
Future articles will focus on other ways you can use behavioral science to price tickets and market your events.
Let’s begin by introducing the science behind the tactics used to motivate people to buy tickets for your events.
Behavioral Science
Behavioral Science seeks to understand human behavior. It encompasses various fields like psychology, social science, and anthropology to understand, predict, and influence actions. That includes how individuals make decisions and are influenced by various factors, including emotions, social context, and cognitive biases.
Cognitive bias is a term used to describe the approach your brain takes to decision-making and judgement issues. When making judgments and decisions about the world around you, you like to think that you are objective, logical, and capable of taking in and evaluating all the information that is available to you. However, even the human brain would bog you down if it had the process all of the information we are exposed to daily.
Cognitive biases are a result of your brain’s attempt to streamline information processing. Biases often work as mental shortcuts that help you make sense of the world and reach decisions with relative speed. While based on our beliefs and experiences, they often go against logic or probability.
Because this process is intuitive or subconscious, people often don’t realize they are acting based on biases or preconceived notions.
You can use cognitive biases to increase the perceived value of an event, and the ticket prices people pay for them. Read on to learn how.
Perceived Value
A question that goes through a prospective ticket buyer’s mind when deciding whether to purchase a ticket for your event is: Is it worth the cost? Will I get the experience I want from the price I pay for this event? Whether it’s a conscious thought process or not, that “discussion” is going on in the brains of people you target to buy tickets for your concert or festival.
It begins with understanding that “perception is reality.” Each person’s subjective understanding and interpretation of a situation becomes their personal truth, regardless of whether it aligns with objective reality. That’s a big driver of event marketing efforts.
The perception of the desirability of your event or venue is separate from the actual value of your event measured in dollars and cents. While the monetary value of a concert or festival may be fixed, the perceived value varies within the minds of those targeted for ticket purchase.
Perceived value is hugely important because the purchase process is often not rational. A higher perceived value will influence an emotional purchase decision to pay a higher price for tickets or chose your event over competitor’s events.
Your event marketing goal is to have enough people perceive the value of your event is worth the price and purchase tickets to sell out your event.
Applying what behavioral science has learned about purchasing behaviors, provides you with things you can do to influence the customer perceived value of your ticket prices. Your event marketing team can use language and design in the presentation of the event and ticket prices to your target audience to increase the perceived value of the costs of tickets.
Using these tactics, you can position your event as a better experience for the money or you can highlight its benefits relative to competitor events. The higher the perceived value, the more likely consumers will choose your event over competitors and be willing to pay a higher price for your event tickets. That means selling more tickets at prices that make for a financially successful event.
Word of Caution: You need to take care that the ultimate experience lives up to the perceived value of your ticket prices. The price must in the end fit the event experience in the minds of consumers. The actual event will influence the perceived value of the event and their willingness to attend future events at that venue.
Setting Ticket Prices for Your Event
Pricing tickets correctly is essential to selling them. After all, price is one of the top deciding factors in whether your target audience will purchase them for your concert or festival. The average ticket price for your event that is being advertised is important. Many event organizers get it wrong.
Businesses often set their prices too low. According to McKinsey & Company, 80-90% of ‘wrong’ pricing for new products comes from prices that are too low, rather than too high. While this statistic is from 2003, it still is relevant today. When a product, in this case a concert, costs too little, consumers may not see its value. Pricing correctly and at a tier that demonstrates the event’s value benefits both the organizer and the ticket purchaser.
Our built-in bias is that if it is expensive, it must be of higher quality. This bias can be negated with a more thorough examination of the product or event. However, there are those, helped by your marketing and pricing tactics, who feel the need to act quickly, and purchase tickets based on their high perceived value and fear of missing out.
There are three approaches to setting ticket prices.
- Break Even-based pricing
- Competitor-based pricing
- Perceive value-based pricing
Break Event Based Pricing
This is setting prices based on the cost of the event. The ideal is to price the tickets higher than what the event costs based upon the expected turnout to generate profit. Unfortunately, this approach to ticket pricing is not grounded in reality. When it comes to setting ticket prices, your costs and break-even point are more about educating you, the event organizer, than it is about setting the actual ticket prices.
That’s because any product or service, including selling tickets is about “what the market will bear” and “what the competition charges.” That means your ticket pricing strategy should be based on what your research or past experiences have taught you about what your customers are willing to pay, not based on your costs. You can learn more by reading our article on Event Ticket Selling: 3 steps to the Right Price.
Competition-Based Pricing
This is setting prices based on what competitors are selling their tickets for. It focuses on competition instead of what the consumer thinks the product is worth, i.e., perceived value. While researching the competition is a must part of the process for setting ticket prices, I’ve seen venues and event organizers blindly follow a competitor’s poor pricing strategy and do nothing to change the value perception of their event.
Perceived Value-Based Pricing
This pricing strategy is based on the perceived value that attendees place on your event. One thing you should do is to check out other similar events to see what attendees are paying. This can give you insight but should not be the only thing you use for deciding your prices. You need to go beyond competition pricing and utilize behavioral science-based tactics to increase the perceived value of your prices or set your event apart from the competition. Then, set your price based on your research and the increase in perceived value you will achieve with the behavioral science tactics you use.
When possible, part of your process should include getting attendee feedback. Engage with your target audience by getting their input on ticket pricing. Conduct surveys through email or social media to understand their willingness to pay and the value they associate with your event.
If buyers believe that the ticket’s perceived value exceeds its cost, they are more likely to make a purchase.
Tactics to Increase the Perceived Value of You Concert or Festival
Understanding the science behind consumer behavior empowers event organizers to strategically set ticket prices that resonate with buyers, ultimately maximizing ticket sales and enhancing the perceived value of their event or venue.
Pricing techniques based on behavioral science wield significant influence over ticket purchasing decisions. From exploiting cognitive biases to shaping perceptions of value and prestige, concert or festival event organizers can use an array of pricing tactics to drive profitability and competitiveness.
Use Price Anchoring Bias to Increase the Perceived Value of Your Event
Price Anchoring Bias:
Anyone involved in event marketing should understand the cognitive bias called “anchoring.” Price anchoring is a bias where people rely heavily on the first piece of information they receive (the “anchor”) when making decisions. It causes people to better remember the information they first encounter rather than information that is presented later. All subsequent information is then viewed in the context of that first exposure.
While this article is about ticket prices and price anchoring, the bias goes beyond just price anchoring. This perception can be influenced by factors like the reputation of the event, the lineup of artists or performers, and the overall experience promised.
In the concert and festival world there are two critical marketing communications where anchoring is critically important. The first is when the event is announced. The second is when your audience is first exposed to ticket prices.
Think about it. That event announcement is going to color the perceptions of all subsequent content that you send to potential ticket buyers to get them engaged and buying tickets. Most event announcements are simple with the artist posting on their social media accounts at the same time the venue or promoter announces on their social media accounts as well as announcements to their email lists.
Most are mundane announcements containing information about the concert, a graphic of some kind and a link to the box office page. Due to anchoring bias, that boring announcement is now what potential buyers will fixate on (subconsciously) as you market to them to get them to buy tickets. You can find more information on event announcements in our article Making Event Marketing Announcements Matter.
Let’s get back to the use of price anchoring and its use to influence the perceived value of your event.
How Price Anchoring Works
As customers, we perceive prices relatively. The first piece of information creates a frame of reference for all subsequent pieces of information.
This means that you can use the first price your target audience sees to influence how they feel about subsequent prices. This cognitive bias brain short cut is not based on rational logic, but more on an emotional process.
The real magic of this effect is that it works even if you are aware of it.
Price Anchoring When Marketing Events
When it comes to new events, our brain creates price anchor points as soon as we start the purchasing process. This means some anchor points are only seconds old by the time we decide. Other anchor points are weeks or months old, depending on how long it takes us to get through the buying process for events. For example, a festival buying process typically takes much longer than a concert ticket buying process.
It’s hard to compare one concert to another, especially when ticketing tiers come into play. In such a case, your brain lacks a clearly established price anchor, so it would create one based on the first price you see. You will subconsciously compare all subsequent prices to that first price, even if the first price was an outlier.
Most event organizers make the first price that people see high to create a perception of high value. They then make the second price significantly lower, so buyers think they are getting a bargain based on the perceived value created by price anchoring and shown by the first price listed. Early bird and flash sales are examples where such discounts can be used to establish great value.
They may release tickets for premium packages (VIP) or exclusive products first. Even if many people don’t buy them, setting a high anchor makes standard tickets appear more affordable.
Remember that a high perceived value and a perceived bargain will lead to people buying tickets. This is especially true when we combine price anchoring with other behavioral pricing and marketing techniques, like tiered pricing, urgency, scarcity and reciprocity, etc. which I will discuss in upcoming articles.
Conclusion:
Ticket pricing using what we know about the decision process of people’s brains can add significant perceived value to concerts and festival. While I have discussed “anchor bias” in pricing, there are a number of other pricing strategies you can used to change the ticket price perception. They include such things as tiered pricing, charm pricing, decoy pricing, and other ways to present prices to increase ticket sales. When used with other behavioral triggers, they provide event organizers a number of science-based tactics to increase concert or festival ticket sales.
As you can see, effective event ticket and marketing strategy design and implementation is a complex process. Promoters and venues should consider a company like TSE Entertainment to help them develop and execute successful event marketing campaigns
