01 Jun 2016

Prima Datarina

The beautiful dance of dynamic pricing
Re: Ming Min Hui (MBA 2015)
by Julia Hanna


Photo by Edmon de Haro

Photo by Edmon de Haro

Last fall, Boston Ballet opened its season with an epic work—an uninterrupted piece choreographed to Gustav Mahler’s Symphony No. 3 that ran just under two hours. “It’s close to pure abstraction, so not a story ballet, not a fairy tale,” says Executive Director Meredith “Max” Hodges (MBA 2010). “We were the first company in North America to perform the Mahler, because it requires an extraordinary orchestra and corps of dancers.”

It also demands something of the viewer, in a way that more narrative works like The Nutcracker and Swan Lake—two of the five other works for the season—do not. “We think about the ballets we’re presenting as part of a portfolio,” says Hodges, who joined the organization in 2014. “Taking that approach makes it possible to balance our mission of developing new works while meeting financial sustainability goals.”

Beyond selecting the right mix of crowd-pleasers and more experimental pieces, Boston Ballet has to sell tickets, which is easier to do for a Saturday showing of Cinderella, for example, than a Wednesday evening performance of contemporary works.

To address that challenge—and engage a broader audience—Hodges turned to dynamic pricing, a strategy with a long history in the airline and hotel industries now gaining traction in the arts world. By analyzing existing data, Hodges and her team have the flexibility to adjust ticket prices on a weekly, or even daily, basis to smooth the demand curve over a fixed number of performances.

“The goal of dynamic pricing is twofold: to maximize revenue, but also to encourage ticket-buying behavior that is beneficial to the arts organization and, importantly, to its customers. Customers are more likely to buy early instead of last minute, subscribe to lock in certain prices, or select lower-sold, less expensive performances,” says Hodges, noting that last year’s new production of Swan Lake by Boston Ballet Artistic Director Mikko Nissinen proved the perfect test case for dynamic pricing. “A big takeaway for the team was that people are willing to view the ballet as a premium product,” she says, adding that ticket prices can climb to $250 for some high-demand performances. “In the box office, we heard people on the phone shouting to their friend, ‘We pay that for Celtics tickets, we can pay it for the ballet!’ ”

Boston Ballet also prices a number of seats at $35, in addition to working with community partners and school groups to offer free and subsidized tickets. “As a mission-driven organization, we want to make performances available to the widest group of patrons possible,” says Hodges. “The range of pricing in a given house can be large.” Last year was the company’s biggest box office since its founding in 1963; the 2015–2016 season also looks strong, with record-breaking ticket sales for The Nutcracker on the books and Swan Lake still to come.

“In the box office, we heard people on the phone shouting to their friend, ‘We pay that for Celtics tickets, we can pay it for the ballet!’ ”
“In the box office, we heard people on the phone shouting to their friend, ‘We pay that for Celtics tickets, we can pay it for the ballet!’ ”

In addition to dynamic pricing, Hodges oversees a number of other data-driven initiatives at Boston Ballet, including a recent examination of its adult dance program led by HBS Leadership Fellow Ming Min Hui (MBA 2015) that revealed retention, and engagement with Boston Ballet outside of classes, was not as high as expected. In fact, about half of adult students attended one or two classes and didn’t return, and only about 15 percent of adult students were donating to Boston Ballet or attending its performances. In response, Hodges and her team are piloting a true beginner workshop so that students will ultimately feel more comfortable coming to drop-in classes. Also under way: earmarking particular performances as “adult student” evenings, and even teaching sections of the ballet being performed.

“The key to anything we do is to stay on a very, very tight feedback loop between analysis, insight, and implementation,” says Hodges. Digging into the data keeps that loop turning with all the speed of a ballerina’s pirouette.

From Baker Library:

Boston Ballet’s adoption of dynamic pricing puts it on the cutting edge of arts organizations. See how other orchestras, theaters, and performing arts organizations are experimenting with business model and pricing innovations – it’s probably no surprise that Disney has a killer algorithm. Or, look more broadly at current research into the theory and best practices of pricing strategy. Learn more about how Baker Library can help you with your research needs.

Featured Alumni

Featured Alumni

Class of MBA 2010, Section I

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