Dynamic pricing in subsidized performing arts

While current pricing strategies in public theaters are mostly based on static schemes, this paper analyzes the potential of dynamic pricing. Subsidized performing arts organizations face the challenge of selling a fixed capacity (available seats of a venue) to a broad and varied audience. Based on the literature and on empirical evidence from a survey among Swiss theaters, we discuss whether and to what extent yield management and uniform-price auctions—two widespread dynamic pricing mechanisms in the Internet age—can be applied to public theaters in view of the particular goals and targets imposed by their source of funding and by subsidy contracts. Our analysis suggests that although the application of yield management may not be advantageous in the current environment, the introduction of dynamic elements (including auctions) to prevailing pricing strategies can help public theaters respond to temporal demand fluctuations and fill up performances with a varied audience. Copyright © 2015 John Wiley & Sons, Ltd.