This is the final video in our series on the 6 metrics that arts leaders should be tracking and managing. View all the videos in this series here>>
Measure What Matters: 6 Metrics Arts Leaders Should Track
Metric #6: Per capita revenue
Is your arts organization generating the most revenue it can for each event? There’s a way to measure that! In this video, Lindsay Anderson of TRG Arts explains how to figure out if your pricing strategy is causing you to lose money, and common causes of lost revenue due to pricing strategy.
Why measure per capita revenue?
When it comes to pricing, many arts marketers think that the percentage of capacity sold is the most important metric. This metric is a simple measure of how full your events are.
But capacity sold doesn’t tell you if your organization is generating the most revenue you can for each event, regardless of how popular it is. To determine this, you should look at per capita revenue, also known as average ticket revenue or per ticket yield. “Per capita” is Latin for “for each head.” So, it’s a measurement of revenue, on average, for each person.
This metric is a barometer for one simple question: “Is our pricing right?”
How to measure per capita revenue:
If you’ve ever calculated average ticket revenue, per ticket yield, or average price paid, then you’ve already measured per capita revenue. No matter what you call it at your organization, here’s how you calculate it. You’ll need two sets of numbers:
- Total sales revenue for each event in your season or year.
- Total unit sales for each event in your season or year. (In other words, how many tickets you sold or visits were made.)
For each event this year, take your revenue divided by the number of tickets, or units.
You can slice and dice this metric in a number of different ways, by series, by date, by buyer type, etc. You can also break per capita revenue out by group tickets, single tickets or subscription/membership purchases. We’d recommend you start with total per capita for each event.
Make a bar chart of your sales revenue for each event, starting with the lowest-selling. Then on the other axis, make a line for per capita revenue to correspond with each event. Here’s an example of what this format looks like:
What per capita revenue tells you:
In a successful pricing strategy, per capita rises as sales increase, like the chart above. That means your best-selling events yield more revenue per ticket than other, less well-sold events.
Too often, however, the chart looks more like the below, where ticket sales increase while per capita revenues actually go down.
You don’t want to see this negative trend at your organization. This is what strategies like dynamic pricing fight to prevent. Dynamic pricing isn’t always enough, though. Per capita revenue might drop as total sales volume rises because of some combination of factors, including:
Scale of house:
As a venue starts to fill, people tend to first buy seats in the main orchestra section—the center and mid-front of the theatre—and then start buying further back. In a traditionally scaled house, the further back the seat is, the cheaper it is. Therefore, the highest price points tend to fill sooner. (Indeed, most marketing and box office staff will tell you that high and low price zones tend to sell out first.) That means that as the event sells, the average price paid tends to decline on its own. Many organizations try to combat this by dynamically pricing the remaining seats. Most don’t consider raising base prices in farther back seats. (One example of this in action is Row L at New Wolsey Theatre.)
Depending on where the premium-priced and cheap seats are (or, in the case of an exhibit, when viewing times are set), per capita revenue will vary based on the order and manner in which your box office sells tickets. By controlling when tickets are released to go on sale, you can reverse negative per capita trends. For seated events, this type of inventory management works hand-in-hand with scale.
Discounting and Comps:
An organization’s discount and complimentary ticket policy impacts this number enormously. When you discount tickets for your hottest events, you’re essentially reversing the effect that any dynamic pricing may have had.
For less in-demand events, many organizations fall prey to “week-of-show” panic. When deep discounts are available as the performance draws nearer, per capita revenue takes a nose-dive during the time when ticket sales surge. Some organizations even “paper” their house, or offer complimentary tickets to try to make it look fuller. This should not be necessary if the house is scaled correctly and you are holding tickets back from sale in sections that are further back.
Is this data point a priority for you? Remember, what gets measured, get managed. You set your priorities by what you monitor. And, as our consultants often say, what can be measured can be managed. Consider holding a weekly or bi-weekly meeting to monitor ticket sales, how events are filling, and metrics like per capita revenue. Tracking this metric empowers your organization to make data-informed decisions and set you up to get revenue results.
Featured in this video:
Lindsay Anderson has been a member of TRG Arts’ senior consulting team since 2007. Currently, she leads TRG’s client development team, matching future TRG client with the solutions that will help them best build sustainable revenue and patron loyalty. Until recently, Lindsay served as the Director of Consulting, managing the team of consultants who implement the best-practice counsel which has gotten results for TRG clients for over 20 years. Lindsay is a protégé of TRG’s late founder Rick Lester on scale-of-house and pricing strategies Rick pioneered, and TRG first put in place a decade ago. She has served as lead consultant with the Los Angeles Philharmonic, The Pantages Theatre, New York City Ballet, Carnegie Hall, Oregon Shakespeare Festival, Theatre Under the Stars, and Zach Theatre, among others. Her career achievements prior to TRG include marketing, sales and public relations positions with the Arvada Center for the Arts and Humanities, Colorado Ballet and Colorado Symphony Orchestra.
Other videos in this series:
Forget earned vs. contributed. It's all about how much revenue your patrons generate. In this video, learn why the earned vs. contributed classification can create siloes and why you should also track patron-generated revenue. More>>
Active patrons are the patrons an arts organization serves today. But will they still be there tomorrow? It depends on how YOU cultivate them. In this video, learn how and why to measure active patron participation. More>>
To cultivate an arts patron, you’ve got to know their history with your organization first. That starts with data. In this video, learn why capturing contact information can mean serious revenue gain—or lost opportunity. More>>
Churn. Attrition. Turnover. Call it what you will; the fact is, you’re losing new patrons. In this video, learn why retention matters, how to measure your risk, and a 4-step process to reverse churn at your organization. More>>
Is renewal rate the best measurement of loyalty? In this video, learn why renewal rate can be deceptive—and the metric arts organizations should consider tracking alongside it. More>>