Ticket Prices

Dan Ariely did a talk for the 2008 TED conference about how irrational we are when making decisions. The whole talk is quite entertaining. What really caught my attention comes around 12:30 where he talks about how a useless option can make other options look more valuable.

He uses an example of a mistake on the Economist.com. They were offering an internet only subscription for $59, a print subscription for $125 and a print and internet subscription for $125. After talking to the Economist and learning it was apparently a mistake, he did an experiment and offered the subjects these options. The web and print subscription option was overwhelmingly favored and no one wanted the print only subscription.

Seeing that the print only subscription was not valued, he got rid of it and did the experiment with the internet only option and internet and print option. This time, the internet only option was the clear favorite. He said the print only option was useless “in the sense nobody wanted it. But it wasn’t useless in the sense that it helped people figure out what they wanted.”

He goes on to say that because we really don’t know our preferences that well, we are susceptible to all these influences.

He offers another amusing example where he has computer generated pictures of two men, Tom and Jerry and he asks people which one they would prefer to date. In half of the cases he adds a third picture with Tom’s face Photoshopped to look less attractive and the other half where is the third picture is Jerry’s face altered to look unattractive. In those cases with the ugly Tom, people preferred regular Tom over Jerry and those cases that offered ugly Jerry, people preferred Jerry. The less attractive option actually made the choice it most resembled appear more appealing than a dissimilar option.

These revelations made me wonder if these behaviors could be used in subscription and ticket sales. Offer people options that don’t have value to nudge them toward purchasing more a bigger subscription package than they might have. I don’t know that it would transform a lot of single ticket buyers into subscription buyers unless we are wrong about flexibility being more important than price. A mini-subscription that offered flexibility and appeared to be a great value might have some success in getting single ticket purchasers to commit.

I also wonder if offering non-premium options with your show helps make them look more attractive than your competitors’. Ariely talks about another experiment where they offered people the option of an all-inclusive trip to Rome or Paris. In this case it is really apples and oranges since the two cities are in different countries have have so many different attributes to value. Once they add the option of going to Rome but having to pay for coffee in the morning, suddenly people preferred Rome over Paris by a larger degree due to the lesser option being available.

It doesn’t seem logical to me to think that given the option between the symphony and a free cocktail at intermission and the opera and a free cocktail at intermission, that people would flock to the orchestra if a no cocktail option for the same price was offered. But as Ariely points, out the decision being made are not entirely rational.

One other element that gives me pause is that all these results seem to be theoretical. No one had to commit time or money to their decision. Still, it is an interesting thing to consider since being theoretically more attractive will help your organization remain in people’s minds if they don’t necessarily commit. Those who see your brochure this year may be struck by what a good deal your shows are. Even if they don’t commit to buying tickets this year, that positive impression may keep you near the fore when they are deciding to attend next year.