Following my post last week on budgeting I’ve been thinking about the concept of forecasting ticket sales, and how you can realistically project ticketing revenue for performances. And that means not setting the target low so you can achieve it easily, or setting high revenue targets so they look good on paper (but are really unrealistic).
The notion of forecasting sales is common across all
businesses, but in the performing arts there can be a large number of variables
which make forecasting ticket sales a complex area. These can include (but
certainly not limited to):
·
The current economic climate
·
Relevant cultural trends
·
Evolving tastes of audiences
·
Pricing of competitors offerings (be it
performances or other leisure activities)
·
What your required ticket price needs to be (using
a sensitivity analysis)
·
Evaluating historical data from the same or comparative
productions
·
Accessing relevant market information (audience buying
patterns etc.)
A quick trawl of the Internet threw up some interesting
reading on the subject of how people approach ticket sales forecasting. This
paper from the University of Pennsylvania on Forecasting Event Ticket Sales uses
complex predictive modelling to generate ticket sales forecasts. It’s an
interesting concept, but I’m not sure that a mathematical equation can take
into consideration all the issues listed above.
More relevant is this paper from the International Journal of
Arts Management on Ticket Sales Forecasting Methods in the UK. In essence, the research found that the more
professionally forecasting was undertaken, the more accurate the results, and
that relying on “gut instinct” alone wasn’t as successful as carefully considering
relevant trends and influences.
There is certainly an opportunity for some science to be
applied in modelling ticket sales forecasts, but understanding trends and
influences in the industry is really essential to ensure your ticket sales
projections are realistic.
I think I'd rather use a crystal ball than a mathematical equation for these projections. But consideration of some of those variables mentioned can certainly help when you are forecasting. I think one good tool is to benchmark your projections against similar sized organisations with similar types of product offer. But that can be tricky too. Most smart managers err on the conservative when forecasting and project around 40-60% capacity at best!! The rest is a bonus. Probably the most important thing in any forecasting is to get all your expenses right up front so you know exactly what number of ticket sales you need to break even. That can often determine your ticket sale projections. This is also best practice in business.
ReplyDelete