If a museum has a base admission as well as other ticketed experiences, does pricing psychology support offering them as a bundle or individually? Here’s some insight.
At IMPACTS Experience, we are currently involved in several conversations regarding optimal admission pricing for major cultural organizations – and for good reason. Research generally suggests that admission cost is not a primary barrier to visiting museums and performing arts entities, even in today’s price-sensitive economy. (Spoiler alert: Being free or low-priced does not correlate with perceptions of being welcoming for cultural entities. Being perceived as welcoming is so much more than admission cost.) Moreover, research currently shows that many entities are potentially underpriced within their respective markets.
For organizations that charge admission, the conversation around ticket prices is bundled up with questions about bundling. (See what I did there?) In other words, the analysis contemplates whether it’s better to offer a single admission price with optional add-ons made available for purchase (e.g., auditorium show, special exhibit, etc.), or to bundle these offerings together at a single price point.
Do people spend more or less money when they bundle? Do they find lesser or greater value for the prices that they pay? Do the people who purchase the bundle have greater overall satisfaction than people who select experiences individually?
Let’s cut to the chase: It’s generally better to bundle.
Generally, bundled purchases result in greater spending than purchasing individual experiences.
But is that a good thing for engagement? Let’s explore.
The three charts below contemplate metrics related to eighteen exhibit-based visitor-serving organizations in the United States, including a mix of museum types, zoos, aquariums, and science centers.
Each of these organizations has a base admission fee required for admission as well as at least one surcharged experience (e.g., show or film, special exhibit, etc.). Each organization presents visitors with the option to either (a) bundle that admission fee with a set of experiences for a single price point; or (b) purchase those same experiences – or individual components of the experiences – separately. Again, the base admission fee is a requirement for entry.
Parking was neither included as an à la carte option in this finding, nor was it included in any bundle. For those with paid parking, this was considered separately beyond the scope of this research effort.
For easy math, let’s say a science center has a base adult admission fee of $20. Visitors could also choose to add on a ticket for a 4D film for another $5 surcharge, and/or take in a special exhibit for an additional $8. Our hypothetical science center could offer an option including all three of these experiences (a $33 value), perhaps even at a reduced rate. In this case, our theoretical organization sets it at $30. This single ticket option represents the “bundled” option – a set fee for all three experiences, usually at a slightly discounted rate when compared to the cost of purchasing access to these same experiences separately.
But what if someone isn’t very excited about the film being shown, and they’d rather not purchase that ticket? Instead, they choose to pay $28 for the base admission and the special exhibit. But perhaps they decide after going through the special exhibit that they have extra time, so they purchase a ticket to the film at a later point during their visit. These folks are choosing the “à la carte” option. Even if choosing all three à la carte, some people will spend more so that they have the option to do what they want, when they want. In other words, they may choose to “pay as they go” (and perhaps even pay a premium for such flexibility).
Now let’s turn to the real world. As you can see in the chart below, people paid an average of 21% more for the bundled experience at the eighteen organizations contemplated in this research.
Note that at these institutions, the bundled experience does not cost less – it costs more! This stands to reason, perhaps, as people choosing the à la carte option may be opting out of an experience…but that’s not always the case. Some people do purchase the potentially bundled components à la carte for reasons related to flexibility. (“Let’s play it by ear and we can always purchase the film ticket if we have time at the end.”)
For the eighteen organizations contemplated that offer both bundled and à la carte experiences, 73% of guests bought the bundle, on average. But only 68% of that 73% actually redeemed the totality of the bundled experience. Nearly a third of the people purchasing these bundles aren’t taking part in all the experiences offered! (The other 27% of visitors purchased à la carte options.)
Does this mean bundle buyers are finding lesser value in their purchase? It’s actually the opposite.
People who purchase the bundle find greater value for their purchase – even if they don’t take part in all of the experiences included in the bundle.
Here’s where nerds like me lean in – because things are getting interesting.
The bundled experience does not cost less; indeed, it generally costs more than purchasing fewer than the total options available in the bundle. However, people who purchase their experiences à la carte generally have lower value for cost perceptions. That is, they find less value for the price that they paid.
To use our previous example, this would mean a person purchasing the bundle of admission, a film, and a special exhibit believes they are getting a better “bang for their buck” than someone who only purchases admission and a film ticket. To be clear, these individuals are assessing their experiences independently of other people’s experiences. They aren’t saying, “I think the admission and the film were a good value but looking back at the bundle option I think that could be priced differently…” No. We’re not asking people to psychoanalyze their own susceptibility to pricing psychology. We’re simply asking them after their experience how much they valued their experience on a 1 to 100 scale relative to the price they paid, whatever they chose to do. It’s not compared to other options that weren’t experienced. It’s simply a matter of valuing their own experience.
It’s worth reminding readers that in these scalar variables, a difference of even one point is statistically significant. From a data-based perspective, the difference from 69 for those who purchased à la carte experiences and 73 for those who purchased the bundle is a big deal. And these folks are paying more for their experiences!
Generally, organizations with higher admission prices do not necessarily have lower value for cost perceptions. “Value” can be a complicated term with different meanings for us messy, irrational, emotional humans. It’s not only a measure of how much money is paid, but also if the experience is perceived as being worthy of someone’s time and attention. Some of the museums with the highest admission prices have glowing value for cost perceptions. And some free or near-free museums have low value for cost perceptions. It considers the price paid relative to items such as entertainment value, education value, employee courtesy, and other aspects of the experience.
Despite paying more (and considering that nearly a third of purchasers don’t take advantage of the full experience), bundle buyers generally still believe they are getting a better bang for their buck.
Bundle buyers generally have higher overall satisfaction
Not only are bundle buyers finding greater value in their experiences, but they also generally have higher satisfaction!
Just as in the previous chart, a change of only one point is statistically significant in this methodology. This change is absolutely of note, and it’s more than a drop in the bucket for those considering bundled pricing (if it’s an option for your organization).
In sum, bundled experience buyers generally spend more, have higher value for cost perceptions, and have higher overall satisfaction than guests who pick and choose à la carte experiences. These higher value for cost and overall satisfaction scores are stable even when a guest doesn’t partake in all the options offered in the bundle.
What’s happening here?
There’s a good bit going on related to pricing psychology. From a visitor behavior perspective, the consumption effects of bundling – including the noted increase in a consumer’s perceived value of bundled items, the promotional effect of offering a bundle, the perceptual value of a discount, and the belief that bundles offer a level of implicit experience or product complements – have been well-documented in the behavioral economics canon for more than a decade.
When experiences are purchased à la carte, the value of these experiences is often assessed independently. However, the lowest perceived constituent components of related transactions tend to bear outsized influence on overall value perceptions. For instance, even though the base admission fee and special exhibits were deemed great values, the film may have had some slower parts. Even though our hypothetical visitor may otherwise have had a great time, knowing that they purchased the film ticket independently and “paid extra” specifically for the film may exacerbate their disappointment in what was a relatively modest component of the overall experience. In a bundled experience, individual components tend not to be less critically evaluated according to their respective, independent values.
From a practical perspective, the benefits of bundled pricing may also be impacted by FOMO (“fear of missing out”). Some bundle buyers are willing to pay a premium to have option to do everything…regardless of whether or not they actually get around to doing everything. Hey, if you’re going to the museum, you might as well have the whole experience – or at least the option of it, right? Some people approach visiting in this manner. Essentially, some people will pay a premium to minimize the loss aversion potentially associated with “missing” an experience.
In some ways, this is an example of “selling the sizzle, not the steak.” A bundled option is often laden with implicit benefits such as mitigation of fear of loss, convenience, and simplicity. On the other hand, the à la carte approach often necessarily highlights explicit benefits: You are getting exactly and precisely what you pay for.
Not every organization can bundle experiences – and we’re certainly not suggesting that every organization should. Instead, we’re sharing this research to enable informed conversations based on actual facts and figures within cultural organizations’ C-suites and board rooms. From here, it is up to your organization to assess what this research might mean for your own organization and its respective pricing strategy.
If bundling is on the table for your organization, then this research and related pricing psychology suggest that it may be worthy of your consideration.
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