Tuesday, July 26, 2011

RESPONSE: A Quick Note about Dynamic Pricing

Oh no, I don't actually have a strong opinion on the subject. I feel as though I don't understand quite enough about how customers (and in this scenario, they are customers, not community members) respond to dynamic pricing.

But Don's assertion is thus:
What I see is an industry desperate to find a way to sustain itself financially without using the very creativity that fuels the work. I see an industry trying desperately to ape the for profit models of industries that still have a viable demand for the product they supply. And the choices being made are lacking.

What I find odd about that assertion is that the assumption that the model being emulated in the airline industry (in the current specific instance, Qantas) is any more successful than ours. There may still be a viable demand for the product in the airline industry, but the airline industry is faced by a number of similar challenges: high labor costs and other fixed costs, along with expectations that prices should be lower. Challenges that are similar to ours.

Some airlines combat this with dynamic pricing; some airlines have taken the nickel and dime approach; some airlines actually combat this with quality (Jet Blue!).

As I think I've said before (oh yes, I did), the challenges theaters face was thus:
[I]t seems to me like there's a fixed amount of money in the system, and that money is simply not enough.

Seeing as there is not enough money, people basically wind up either:
  1. Compromising their mission to provide more popular fare that they can squeeze revenue out of.
  2. Compromising their artists in the form of low wages, etc.
  3. Compromising their staff (such as an entire literary department).
  4. Compromising their audience (through the form of high ticket prices).
  5. Failing.
Little seems to have changed. So some organizations are going to define themselves by preserving their professional staff and their money for artists. Others will compromise their audience. And that's the choice each theater makes... which actually does get back to the larger point Don was making. About what kind of airline/restaurant/theater you want to be.

If I was going to bring in an airline to counsel me on my theater, I would probably bring in Jet Blue, and I'd ask them: you seem to understand the air passenger's experience. Can you look at my audience-member's experience with fresh eyes?

Not unlike this story from 99% about Toyota telling a cancer clinic how to improve care.