West End shows are a risky business for producers and theatre owners. Richard Howle breaks down the pricing of a production, showing how investors’ expectations are balanced with what punters are prepared to pay
At the end of last year, The Stage asked readers how much they were prepared to pay to see a West End show. A third said their upper limit was £50 when buying tickets, while only one in 10 was prepared to pay for ‘premium’ seats.
The response may not have been representative of a typical West End audience member but it does provide a useful benchmark. And the inevitable question that follows is: how does that compare to the realities of West End pricing?
Let’s look at a new musical due to open in the West End this year and call it Show A (I could have picked any show). I have calculated the percentage of the seats allocated to each price band when it went on sale. The results show a disparity with the prices The Stage’s readers are prepared to pay.
That 9% of The Stage readers are willing to pay more than £100 is reflective of actual sales in the West End – about 10% of seats sold are at premium prices. That is an average though, and on Show A, the producers are hedging their bets, starting with 15% of the house priced at more than £100.
It’s important to note that pricing breakdowns when a production goes on sale are just the starting point. These days pricing, particularly price bands, are a fluid concept. Show A’s producers will be quick to respond to sales demand, moving some of those premium seats into lower price bands at lower-demand performances, and adding seats to the higher-price bands at the more in-demand shows.
While some people baulk at paying £100, there is a market for those prices, and producers have a duty to get the most income they can for their investors to recoup and hopefully profit from the show.
The next price bracket – from £76 to £100 – proves the biggest disparity between the poll and how producers price the house. In Show A, 44% of the seats are on at that bracket, but only 12% of readers were prepared to pay the price.
This looks a huge mistake by the producers, but actually the number of seats in this price band is about right. This is the range in which the vast majority of group sales are sold, with group tickets knocking up to £40 off these prices.
This is also the band where a lot of ‘treat’ tickets are sold to celebrate birthdays, anniversaries or annual trips to London to see a show. While the regular theatregoer may not want to pay the prices, there’s a huge market for these one-off visits. Combined with group sales, if the show is a success, the largest portion of seats sold will be in this price bracket.
So what about the tickets selling between £51 and £75? More than a quarter of The Stage’s readers say they would pay that much, yet producers are likely to offer only 7% of their seats at this level. I have sympathy for producers here: you have to put intermediate levels between the most expensive and cheapest seats so a punter can find the right price for them. The binary choice of £25 or £125 would be off-putting, so in any pricing structure, there are ‘bridging’ prices.
In reality, what a customer thinks they want to spend and what they actually spend are two different things. The poll had no qualitative measure. While 28% of respondents were prepared to pay £51 to £75 for their tickets, it didn’t reveal if they were prepared to sit at the back of the stalls for that price.
What normally happens is audiences look at where a mid-price ticket gets them, and will either pay more for better seats or move to cheaper ones. Having been involved in ticketing for 20 years, pricing up small 100-seat venues to 15,000-seat arenas with ticket prices ranging from £7 to £20 or from £75 to £300, I can tell you it makes no difference: the middle prices are always the hardest to sell. So it’s right for Show A to put just 7% of seats at that level. It provides the necessary bridging but will be the last to be bought.
According to the Society of London Theatre’s 2018 box office report, the average ticket price paid in the West End stands at £49.25, so it should come as no surprise that the most popular price band in the poll is £26 to £50 – because that is what reflects the reality of sales.
For Show A, 24% of seats are priced in this band, but once group rates and other discounts and concessions are accounted for, the percentage of tickets sold for prices in this range will be considerably higher.
Finally, 17% of respondents said that they were prepared to pay no more than £25 for their ticket. But for most productions, selling tickets at less than £25 means that they are selling tickets at a loss – so it is unsustainable (and unrealistic to expect) that 17% of seats would be priced in this bracket. Nevertheless, Show A, recognising that it is important to have an accessible entry price, has allocated 10% of the house at £25 or below.
Of course, when the producers set ticket prices, they don’t really know how it will sell. They will have some idea of demand, and experience and market conditions will guide them, but it is a multimillion-pound gamble – price it too high and the audience won’t come, price it too low and the investors will miss out on a return that they could invest in the next production. What is clear, though, is that the stakes are becoming even higher. With demand for theatre space at a premium, the theatre owners (who have high operation and refurbishment costs) have the whip hand.
Whereas in the past, producers would have the luxury of an open-ended or extended run to recoup their investment and theatres would nurse productions through difficult times, increasingly producers (particularly for plays) are given a strict 12-week window, because there is already another production lined up to take its place.
Faced with this tight recoupment schedule, producers are having to put up prices – particularly at the top end – and then put star names into their shows to encourage people to pay those prices. But those star names cost money and the spiral continues.
At the moment, there is a market for those ticket prices, mainly from tourists, especially while the pound is weak – but how long will the bubble last? For regular theatregoers, the top-price tickets are getting further out of reach. That doesn’t mean that they have stopped going to the theatre – but perhaps three visits a year, not four. And, maybe, if they are spending a lot of money seeing a show, they are less likely to take a risk on an unknown playwright or leading actor.
The West End is a demand-driven market that exists in its own economic world. It is there to be the pinnacle of the theatre industry and provide revenue for the rest of the sector. For many commercial producers, the economic powerhouse of the West End enables them to present productions all around the country, supporting and sustaining our regional theatres. Subsidised theatres putting shows into the West End bring money back to invest in taking creative risks and helping artists grow. So yes, West End theatre can be expensive, but the whole of our world-leading industry benefits.
Richard Howle is the former commercial director of Really Useful Theatres. He is now director of ticketing for the NEC Group