The Indianapolis Zoo has adopted dynamic pricing. The policy is combined with increased differentiation in prices between low-demand weekdays and high-demand weekends, and a general increase in prices arising from the increased demand that will flow from the new orangutang exhibit. The Indiana Business Journal reports:
The zoo expects the move to generate more revenue as well as keep peak-day crowds to a more manageable level, improving the visitor experience. Officials are projecting 2014 attendance of 1.28 million, a 24-percent jump over 2013 and the highest count in years.
“The significant advantage this model offers to visitors is to save money by purchasing further in advance and [visiting] during the week,” said Karen Burns, the zoo’s senior vice president of external relations. “Prices are dynamic, which means that people need to lock in their lowest price by buying online as the prices are subject to increase.”
Does this make sense? I think it does. I speak from experience in visiting this zoo, that it is less enjoyable when very crowded, and so pricing as a mechanism to even out the distribution of customers, encouraging more people to visit on otherwise quiet days and fewer people to visit on otherwise crowded days is a good idea. This is accomplished in two ways by this scheme – posted differential prices in advance (and advance tickets can be obtained online) for times when the zoo knows well in advance which days are more and less popular, and the addition of dynamic pricing for when there are unforeseen fluctuations in demand.
I have written before about why I don’t think we see much dynamic pricing in the arts; presenters don’t want to reveal low demand for shows for fear of sending an adverse signal about the quality of the production. But the zoo is more like professional sports than the arts, in the sense that customers know in advance what they are getting (unlike the case for a play or a novel, which we can’t know much about until we have experienced them). If zoo ticket prices fall for some Tuesday in September, it won’t make me think that the animals will be less interesting on that day, in the way that falling prices for a new play might indicate to me that it is not a very good play.
Is the new system bad for low-income customers? Just focusing on differential pricing by day, plus dynamic pricing, I do not think so. It gives a range of price options rather than a single one, and low-income customers can take advantage of the low-price options. People on a budget are generally glad there are half-price day-of-show theatre tickets, cheap Tuesdays at the movies, and paperback versions of books.
Personally I find that this type of dynamic pricing antagonizes me rather than helping.
It is another example of businesses abusing customers whose life does not revolve around a need for that particular business.
For myself, I go elsewhere.
I believe that there is a strong case for discriminatory pricing at the zoo, as has existed for decades at performing arts organizations. It makes sense to offer lower prices (or even free days) on weekdays and other times when there is less demand, offer discounts for students and possibly for seniors, and other categories that make sense for the organization. However, patrons should be motivated to purchase tickets well in advance, if they can, because of likely scarcity, not because prices will rise closer to the time of the event. Yes, the zoo should limit the number of people who can enter at any given time to improve the visitors’ experience. But this does not mean they should use this as an opportunity to raise prices dynamically.
When arts organizations choose NOT to employ dynamic pricing, a large part of their reasoning is a moral one: arts organizations (and zoos) are nonprofit organizations and often have a mission to attract as many people as possible. In this important sense, zoos are more like performing arts organizations than like professional sports. In nonprofits, revenues are a means to an end; not an end in and of themselves. Many people who would like to attend cannot plan in advance nor can they attend on weekdays. They should not be “punished” for this with continually rising fees. It is enough that prices are higher at the most desirable times without the prices being raised as demand increases.
Many nonprofit managers defend dynamic pricing because the airlines do it all the time. But people consistently abhor the airlines’ pricing model. Why should we copy them?
I discussed this issue in great detail in my new book: “Standing Room Only: Insights for Engaging Performing Arts Audiences,” 2nd edition.
Joanne Scheff Bernstein
Thank you for this thoughtful comment. I think we need to separate generally rising fees from dynamic pricing, which can involve falling as well as rising prices. Let me take one example. You write ‘people consistently abhor the airlines’ pricing model.’ Do they?
I was at O’Hare yesterday. It was full of travellers, not all from the 1%, many of whom will have taken advantage of ‘deals’ on particular flights, where those deals arose from flights being undersubscribed at their original prices. Students and middle-income travellers face *much* lower prices in real terms than decades ago, and to at least some degree that is due to dynamic pricing, which allows them to search for best fares. It is a sweeping claim to say that these travellers ‘abhor’ dynamic pricing – I don’t think it stands up to the evidence.
Michael, Of course I agree that people are delighted to take advantage of discounted or otherwise lower fares from the airlines, as well as from arts organizations. My concern involves prices that are being raised, not lowered.
I think that what people abhor the most with airlines pricing is that prices often rise — hour by hour –(or even more frequently), and that same practice is happening at some performing arts organizations that can afford the sophisticated software and accompanying consultants to implement these procedures. It’s quite frustrating for a theater patron who checks a date, time and price; then checks with companions about preferences; then goes back to order tickets and prices have just risen.
If value is being added, I have no gripe with this method. What people care about more than price is value, and it is crucial for arts organizations (and zoos) to make sure they are providing good customer value. If an increased price means that people will be able to see a terrific show they couldn’t get into otherwise, then the value is there. But I believe this tactic should be used sparingly and a focus on pricing should not detract marketers from other important marketing functions.