The True Cost of Theatre and Why it is Unsustainable

Introduction

LeicesterPrice represents one of the legendary seven P’s of marketing (The others being product, place, promotion, people, processes and physical evidence). Poor implementation of the other six P’s will hinder a project to no end, however the incorrect execution of price can single handedly destroy a product. Theatre is absolutely no exception and a producer cannot afford to set their ticket prices arbitrarily. To assist this endeavour, we need to understand all associated costs with attending theatre. Readers outside of Australia please take note that all prices are quoted in Australian dollars. 

The True Cost of Theatre

allian-web-marketing-costWhen setting the price for a show, it is not as simple as asking for X amount of dollars in exchange for a performance of Y amount of time. The nature of theatre asks for much more from a customer:

TimeTheatre attendance is quite demanding in terms of a time investment. It generally requires a person to plan ahead and block out an entire evening or afternoon. Let’s say we have a standard 90 minute show that starts at 7:30pm and finishes at 9:00pm. A customer must spend time getting to and from the theatre (for arguments sake, let’s say anywhere between 45-60 minutes each). Of course most patrons are not going to arrive at 7:30 on the dot because that’s when the show is set to begin, so let’s add on another 15-30 minutes to account for being at the venue early. All of a sudden our 90 minute show requires a time investment of somewhere between 3 hours 15 minutes to 4 hours. It could be argued that the same could be said for going out to a cinema, but the the large majority of films are generally available at a convenient local location that require less of a time commitment. A theatrical production only has one venue and if you don’t live nearby, then tough.

TransportWhether it’s public transport, your own car or a taxi, getting to theatre carries a cost. A bus or train may cost as much as $5-$15 return. If you have your own car then you may end up having to pay for parking. Let’s say $10 if you do and we won’t take fuel into account. The most expensive option of the taxi could cost anywhere between $20-$70 to get you to the venue and back home.

MealsLet’s say a customer finishes work at 5:30pm on a Friday afternoon and has decided to go to a show at 7:30pm. Hunger chimes in and reminds the customer to neglect it at their own peril. A decision to go to the theatre can often result in eating out by association. A customer may go for a quick snack to tide themselves over for $5-$10 or a full dinner at the cost of anywhere from $15-50.

IncidentalsOnce we’re finally at the theatre you might want a glass of wine or a beer to drink in the foyer. $5-$10. Oh and they’re also selling programs for $2-$10.

Totals


health-insurance-wallet-stethoscopeLet’s assume the best case scenario for our wallets first:

  • We’ve paid $30 for a ticket to a 90 minute show.
  • We live close by and can take public transport ($5-$15).
  • We decide to fight against our stomachs and wait till we get home for dinner ($0).
  • Foyer drinks and programs do not tempt us in the slightest ($0)

Excellent! Our $30 ticket has only become a $35-$45 ticket for the evening, but that is up to 25% more than most companies may consider when setting their ticket price.

Shut-up-and-take-my-moneyNow let’s look at a more unfortunate financial situation:

  • We’ve paid $30 for a ticket to a 90 minute show.
  • We drive ourselves and have to pay for parking ($10).
  • We give in to basic human needs and decide to have dinner ($15-$50).
  • A drink in the foyer sounds lovely and of course we must have a program ($2-$10).

Not so excellent. Our $30 ticket has become a $47-$100 ticket. Ouch. In addition, all of this is assuming that we’re going to see a show with a relatively low price tag of $30 per ticket, we’d never touch a taxi, that we are very frugal in where we choose to eat and that we are only paying for a single person. For a couple going to the theatre, the costs can easily spiral into the hundreds of dollars. As an independent producer, it would be of great benefit to perform this true cost analysis in order to understand exactly how much you are asking your customers to pay.

Theatre and the Law of Demand

Alright, economics time! So we’ve established that the true cost of theatre is far greater than any of us would like. Unfortunately, there is also good reason to believe that demand for theatre is on shaky grounds as well. The law of demand states that (holding all other factors constant) raising prices results in a reduction of demand. So already we have an incentive to keep prices as low as possible, however theatre has a couple of extra features that compound a decline in demand:

Theatre is a luxury product. It will always be one of the first things to get axed when times get tight.

Theatre has readily available substitutes. For roughly $18 – $25 a customer can go to the cinema and see a wide variety of works featuring world class filmmakers at a time that is convenient to them. Or for $14.99 a month, a customer can purchase premium Netflix access to over 1000 titles at literally any time they want to watch them. A customer can even choose to not to spend a single cent and browse YouTube for free. If the price of theatre becomes unappealing, many customers will not think twice about substituting it for any of the aforementioned options. 

netTheatre’s competition is cheap, diverse and convenient.

Takes up a significant portion of weekly budget. After paying for rent/mortgage, food, children/pets, transport, education, bills and every other little thing that pops up demanding your hard earned money, a night out at the theatre is a significant portion of your remaining income, if anything remains at all. 

The price of seemingly unrelated products will impact theatre. Because going to the theatre costs far more than the ticket price, other factors will dictate decisions to attend. If the price of public transport or petrol were to suddenly rise then a potential customer may decide not to attend because of the additional costs.

Essentially, theatre is highly price elastic. 

Elastic-Demand

Potential Unsustainability 

With the cost of theatre being so high and the demand so easily influenced, the future of the industry may well be on unstable ground. To be clear, it is in no danger for the immediate future. The majority of main stage theatre has an established audience base, with the two most likely age groups to attend theatre being 45-54 and 55-64 (Discussed in this previous article). However, when this audience base passes on, another generation will be needed to replace it. Currently, the price of theatre tickets indicates that companies are not adequately fostering this potential new wave of attendees and it has resulted in a whole generation being priced out of theatre. The median income for generation Y in Australia is between $40,000 to $50,000 before tax, compared to the Australian-wide average of $68,895. This income after tax, with all of the usual weekly expenses listed above and higher education loans, means that young people simply cannot afford to go to the theatre. Of course, this average income will rise in time but by then it will be too late. We will have a had a generation make their way in the world not knowing theatre and unwilling to take a chance on a medium that excluded them.

This is a very long term view, however, if theatres do not do a better job of cultivating a young theatregoing community today then there may not be one tomorrow.

Conclusion

Part of the foundation of setting ticket prices in theatre is understanding the true cost of your product. The audience’s time and money are both scarce resources and theatre can demand a surprisingly large share. Without this understanding, a company risks making a poor value proposition and repelling potential attendees with a price tag alone. Furthermore, this true cost in it’s current form will need to be addressed in order for theatre to thrive in the future.

I want to go to the theatre regularly. I want to be able to take a chance on productions and not have to wait until a show is getting nothing but fantastic reviews to justify spending my limited time and money on it. At this point in time, that is not possible.

Until Next Time

Thanks for taking the time to read this article. Please feel free to join the discussion through the comments below and check us out on facebook. I’ll be back soon with another article promoting the art of marketing for the arts.

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2 thoughts on “The True Cost of Theatre and Why it is Unsustainable

  1. Katrina Shaw

    Where can I get a theatre ticket for $30?? Average price for a musical in Sydney is easily $120 a ticket. Parking is $25, as is the program. Try taking a family of 5 to the theatre and you’re lucky to get away with $850.

    Liked by 1 person

    1. sirspicious

      The $30 ticket price is more for your average independent theatre production, which is the general area that this blog is aimed towards. You’re completely on point though. The true cost of theatre is absurd, particularly when attending a major musical. I got tickets to Les Miserables for my mum for her birthday. Four tickets were just shy of $500, along with dinner for four on the night and everything else. It’s a huge investment in two and a bit hours of entertainment.

      Like

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