I apologize for failing to get a post written last week. I thought I’d manage to pull it off, but my wife was in the production week for a play she was directing at our local community theater. Community theater is one of our major family community involvements (we’ve both directed several shows over the years, and acted in others, and I sit on the community theater’s board) and no matter how much I think that “this time will be different” I always end up in the theater till nearly midnight each day during production week.
So, since theater has been on my mind lately, let’s take a moment to look at a pricing dynamic which out community theater group dealt with recently.

Up until the 2020, we usually charged $10 per ticket for our shows. When we resumed live shows after the pandemic, we started to experiment with higher prices and quickly settled on $15 per ticket.
Ticket sales did not decrease. Indeed, as people excitedly resumed attending in-person events (and our mailing list and word of mouth in the community grew) we saw our audience sizes increase even as we upped the ticket prices by 50%.
Our community theater, which had long struggled to cover its costs, was suddenly making significantly more money and was able to upgrade sound and light equipment which in turn improved the experience and continued to grow our audiences.
I don’t want to undersell the important of both increasing our reach in the community and delivering a reliably good product — you cannot achieve pricing wins without marketing and product strength — but right now I want to focus on the part which actually increased our revenue: the price increase.
Many businesses would be very hesitant to take a 50% price increase, and they are right to be. However, there are certain situations in which you can take a 50% or even larger price increase with a fair amount of confidence.
So why did this work, and who else could have similar success?
One key factor is that our tickets are fairly cheap overall, and they aren’t a significant part of our customer’s overall budget.
Both factors are important.
The low overall price point is important in that five dollars is not a significant amount for most buyers.
However, that’s only because of the second factor: that it is not bought frequently enough to be a significant part of the buyer’s total budget.
There are, after all, lots of items on which customer are very sensitive to high percentage but low dollar price increases because they buy often enough that the item is a significant part of their overall budget.
For instance, a gallon of gas currently sells for about $3.00 around here. If that price increases 50%, a mere $1.50 in absolute dollars, people will do things like… vote out the party currently controlling the government.
The reason why people are so sensitive to the price of gas is that they buy a lot of gallons of gas. The impact to their budget is not $1.50 on one gallon. I use about 12 gallons of gas a week in my car. Multiply that by 52 weeks and a $1.50 increase in the cost of a gallon of gas would be nearly a thousand dollars a year. That is an amount you will feel.
This is why people will be similarly sensitive to large percentage increases in the price of other things they buy frequently.
However, tickets to our shows are something which can only be bought four times a year. Someone who sees all four of our shows each year would pay $20 more over the course of a year. So the low frequency of purchase, plus the low overall price, means that for most patrons even a 50% price increase will not seem like a significant increase in their annual entertainment spending.
This is not just a factor in consumer spending, it affects business to business pricing as well.
In B2B as in B2C, the key question is how big a part of your customer’s spending your product is. This is because procurement staff have only a finite amount of time to spend. If the product you sell is a rounding error in your customer’s total spending, and if it would take work from the procurement people to find another option, you have a fair amount of latitude in pricing.
Imagine, for instance, that you sell custom rivets to an airframe manufacturer. The rivets are a tiny portion of the cost of building an airframe, and you are a reliable supplier who always has product in stock and delivered on time. If your price quietly goes from $0.02 per rivet to $0.03 per rivet, is your customer going to put the time in to find and qualify another supplier? Probably not.
The key questions to ask yourself are:
Does your customer value your specific product?
Would a significant % increase in your product’s price have a significant impact on your customer’s total budget or a negligible one?
Is there another product (with a lower price) which can very easily be substituted (like the next product down on the Amazon page) or do you have a unique relationship with your customer because of location, past history, etc.?
However, one caution: whether you are selling theater tickets or rivets, one key thing to keep in mind is that this is not the sort of tactic you can use again and again. A large percentage increase on a low price is doable the first time, but if you do this frequently your price will soon not be low and the frequent increases will bring your price to your customer’s attention. Getting greedy with pricing will gradually (and then quickly) damage your relationship with your customers.
But if you find that you are in the situation of selling a product which fits these criteria (a low price which is a small percentage of your customer’s overall spending for a product your customer is attached to) you might be able to increase your revenue by 50% or even more simply by making a price change. Nice work if you can get it.