Thought Fuel
When it comes to cultural organization admission pricing, 70 is the new 62.
In the US, the general perception of what it means to be a senior citizen has changed. Setting aside what many expect to be short-term, pandemic-related anomalies, we now generally have longer life expectancies, people are increasingly continuing to remain active and productive as they pass traditional “retirement” ages, and even bedrock programs such as Social Security retirement benefits have increased their ages for eligibility.
All considered, Americans are aging longer – and, arguably, better and more productively – than ever.
Unsurprisingly, this shift is also manifesting itself in the data-informed optimal price points for admission to museums and performing arts organizations.
It’s common for cultural organizations to offer an admission fee structure that recognizes some differentiation based on age. For instance, an organization might offer an adult admission fee as the primary admission price point, alongside others such as a youth fee; an infant or small child fee (sometimes complimentary); and a senior fee.
Unfortunately, these ranging price points are often calculated using methods generally divorced from actual data or market research. Far too often, these price structures are the products of experiential intuition or unintentional collusion in which a leader says, “The place across the street is charging $25, ergo we should be charging $25.” Even worse, some price points are simply determined using the vibe approach whereby a leadership team says, “$3 off for seniors just feels right to us.”
When we conduct pricing studies at IMPACTS Experience, we take the various market cohorts into account and deliver the optimal price points as they apply to respective market segments as informed by the data. It is precisely in conducting these studies for individual organizations that we observed a broader trend. From there, we pulled the aggregated market research regarding cultural organizations in the United States and – aha! – we have a data-informed finding that may be critical for cultural institutions across the board to consider.
The research in the two charts below contemplates 81 cultural organizations in the United States that all have an adult admission basis greater than $20. This mix includes both exhibit-based and performance-based organizations. The data are contemplative of the most recent assessment period as of the third quarter of 2022.
The first chart shows the percentage of respondents who believe that the organization’s admission basis represents a good value (in this example, segmented by age cohort). Remember that the concept of value considers the overall experience, and the relative admission price point by itself does not necessarily correlate with something being perceived as a good or bad value. A poor experience at $5 can be a bad value. A satisfying experience at $60 can be a good or even excellent value. In other words, “admission value” is not interchangeable with “admission cost.” Even some organizations in the United States that do not charge admission have low value perceptions due to the belief that the experience was not worthy of a person’s time. Admission value is a measure of how much personal value was derived from the experience given the time and cost of admission.
You’ll notice a distinct decline in the percentage of recent visitors aged 70+ who believe that the adult admission cost that they paid to a cultural organization represented a good value.
The next chart takes things up a notch and considers the percentage of people who believe that the adult admission fee was an excellent value. Again, you’ll notice a dramatic perceptual decline starting at age 70.
What does this mean for pricing strategies for cultural organizations?
There is generally no market-driven demand for a differentiated senior price point below age 70.
You read that right. Offering a discount to people younger than 70 years of age generally leaves revenue on the table. These findings risk running up against some serious status quo bias among cultural executives who may have grown comfortable offering senior discounts to visitors aged 60 or 65. In fact, visitors aged 65-69 in the United States have no statistically greater demand for a discount than visitors aged 35-44. They are similarly satisfied – that is to say, they find similar value – with the same adult admission price!
Lowering the price point before age 70 risks diminishing the lifetime value of a visitor
An organization still offering a senior discount to a 55-year-old, for instance, risks losing multiple years of optimized value from this visitor – and these years can add up! This is a steep price to pay for cultural organizations across the board that need to optimize their revenues. Consider: An organization offers a senior discount to a 55-year-old who attends on a typical visitation cycle approximating 27-30 months. By offering the discount at 55 years of age rather than 70, this organization may have opted to discount themselves out of additional revenues for six visits in the duration until this visitor comes of a more data-informed age eligibility.
These unnecessary discounts certainly are notable per visit, and they are potentially significant in the aggregate when contemplated in the context of lifetime customer value. Those visitors who can and will pay admission fees play a major role in securing the revenue to invest meaningfully in access programming that actually engages audiences who may otherwise not be able to attend the organization. The consequential impacts of an ill-advised discounting strategy are systemic and profound.
Lowering the price point before age 70 also disincentivizes membership opportunities for a potential core audience
Members tend to be older than general admission visitors. (Let’s call them wiser as well. They have chosen to become members, after all!) Offering a senior discount too early – and especially before there’s market demand – risks disincentivizing opportunities to become a member for these audiences. To the extent that “free” admission may be a primary membership benefit for an individual, a discount may diminish the nudge to become a supporter. Critically, research from IMPACTS Experience shows that being a member to a cultural institution in the United States is among the top indicators that someone may be a likely donor. To the extent that organizations may be interested in growing this increasingly critical community of supporters, incentivizing likely members is a good idea.
Admission pricing can be a complicated issue – especially when it’s not based upon market research. Thus, it’s exciting to see such a clear trend to indicate a data-driven strategic direction for the sector.
Societal sentiments concerning aging continue to evolve. Keep pace with how people self-identify as “senior citizens” – and the benefits they expect –at the admission gate.
IMPACTS Experience provides data specific to organizations or markets through workshops, keynote presentations, webinars, and data services such as pricing recommendations, market potential analyses, concept testing, and Awareness, Attitude, and Usage studies. Learn more.
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