Image: Ikea.
Few would argue that IKEA – the Swedish homewares giant – doesn’t have one of the most successful business models in the world.
Largely, that has been the result of a self-driven consumer experience where you pull it off the shelf, assemble it yourself, and feel so chuffed that you fall in love with the company – what has been colloquially called, “The IKEA Effect”.
There is another aspect to this business model, however, that the arts can learn from. IKEA sets the prices of its products before they are designed.
Pricing arts events is one of the most difficult hurdles faced across the sector. Set it too high, and it could be production suicide, but too low, and one will dwell in the red. The need to price wisely is not exclusive to the performing arts or festival market. In today’s experience economy, every arts organisation from the regional gallery to the city-based museum needs to consider the right price point for their events.
NAVA Executive Director, Esther Anatolitis has long been a fan of the IKEA principal, and has been advocating its merits for years. During her tenure with Regional Arts Victoria, she said that the organisation was careful to follow the IKEA principle, and in her current role with NAVA, has been mindful to apply it to their Future/Forward program.
Antolitis told ArtsHub: ‘It’s essential that organisations design the price first, before getting carried away with the bells and whistles that make attendance prohibitive. Being very mindful that artists are increasingly priced out of events that truly should be for them first and foremost.
‘Case in point here is the Victorian Creative Industries Summit, which is completely unaffordable for artists, co-opting instead their boldness and innovation to put on an event designed to make the Victorian Government the hero,’ she continued.
In contrast, Eleanor Howlett of Melbourne-based Sassy Red PR, makes the point that in the same way that IKEA furniture isn’t for everyone, neither are all arts shows.
‘I don’t think artists (for the most) sit down, take a good look at their product, and truly map out who the target audience is; who their main demographic is, and where those people are situated financially. That should be a true consideration when pricing events, as well as what’s happening externally to the event at the time – that is knowing your market place,’ said Howlett.
Can the IKEA philosophy help the arts?
IKEA Sweden’s Business Manager, Per Krokstäde says that ‘aiming for a low price is one of the hardest parts of his job, but also the most important one’.
He explained to Business Insider Netherlands: ‘Let’s say we want to design a chair that costs no more than $19. This determines the choice of materials we might use… And then we work toward that goal.’
Krokstäde said that the design team will take in various factors – like the least components required, optimal shipping and delivery, functionality – and only when they believe that they have reached a product’s lowest price, will it be presented to management.
‘Just when you think you’re there, management comes over to tell you they think the price is still too high,’ Krokstäde said.
‘In the end, everything IKEA does must create a better everyday life for “many people”’, said Krokstäde, describing the company’s enormous target audience. Perhaps this is where the synergy with the arts falls.
While we might be comparing apples and oranges – chairs to bespoke arts events – arguably the same message can be applied when it comes to reach. We want the arts to better people’s lives and, rather than be exclusive, to encourage all to embrace, and so getting the price right to bolster that engagement is key.
Image Shutterstock.com
It’s not simply a consideration of production and delivery
Heather Whitely Robertson, who is Head of Learning and Participation at the Art Gallery of New South Wales, says the Gallery’s ticketed public programs are all designed by price point alongside content.
Unlike the IKEA principal, in the arts our events and audiences are a lot more nuanced and considering content goes hand-in-hand with pricing and demand.
Robertson told ArtsHub: ‘Whether AGNSW is creating collaborative artistic partnerships with the likes of Sydney Dance Company or a scholarly art historical symposium, a ticketed program build begins with a mapping of artistic ambition and an analysis of ticketing price point.
‘This early stage planning enables us to determine whether other sources of funding are required to deliver these activities. Generous support from private and corporate partners is often an essential ingredient in the public programming mix to ensure that ticket prices are maintained at market value and importantly, that our programs remain accessible for diverse audiences,’ she said.
It was a point that Wendy Martin, Artistic Director at Perth Festival, also made. ‘When I started in performing arts, I came from television, where everything was commercial, and I had assumed you make the ticket prices to cover the cost of what you are doing. That was so utterly naïve. A lot of what we do in the performing arts is subsidised by government, philanthropy and sponsors, which doesn’t figure in the IKEA equation,’ said Martin.
Martin believes that the IKEA pricing model doesn’t make sense to a performing and festival market. However she recognised the need to varying scales of pricing, especially a sharply tailored lower end.
‘Those lower price points allow people to give it a go, and in the context of a festival, that is a great thing,’ said Martin.
‘Everything we do at the Festival is never related to covering costs,’ she told ArtsHub. ‘Rather, when you are setting prices you are thinking about what people are prepared to pay for what they are seeing.’ Martin believes this is the golden rule to getting it right.
As an independent working with clients in the sector, Howlett added: ‘Artists are also constrained by venue ticketing structures at times, as some of them dictate to venue hirers what to charge. Which is a flawed system, in my opinion. Because it makes the assumption that every venue hirer (and I’m not talking about shows that are programmed into a venue season here and that are co-productions) is creating a product that’s of a similar quality and pitched at the same audience every time, which is rarely the case. I understand why the venues do this, but I think it can disadvantage artists. I mean, do we want to just keep attracting the same audiences to see independent theatre, or do we want to branch out and create new ones?’
Martin also made the point that as a product becomes rarified within the commercial sector, the ticket price can go up. ‘Think of airlines – when a deal is selling out and there is a massive demand they increase the prices, or if you buy in advance it is cheaper than deciding to go away on the weekend two days before.’
She continued: ‘Bottom line is that there is no science to it. There may be more of the science if you are a commercial event producer, but across the arts and festivals more generally, it is a range of prices for a range of audiences.’
What Martin and Robertson both subscribe to is knowledge of your audience and your potential market to grow, and price to their pockets and content interests.
Howlett, like Anatolitis, edged more towards the view that ticketing is a keen business, and those numbers are important at the end of the day, both for the organisation and the audience.
‘The business side of “Show Business” makes me think in order for us to survive and evolve, we need to focus on the latter,’ Howlett concluded.
