CHIEF EXECUTIVE CUSTOMER

Over the last 4 months I have logged in over 12,000 travel miles visiting scores of theatres to discuss their conversion to Digital Cinema.  One question that almost always arises, goes something like this, "should I raise my admission prices upon conversion".  At first blush the answer seems easy. Will the current customers (and possibly new ones) continue to attend and support the cinema, if prices are raised?  But the answer is more complex.

Lets face it, every business has to raise its prices at some point.  And if you provide genuine value, and the price boosts aren't too onerous then your customers may accept them in stride.  But by the same token, raising prices can be tricky, particularly in the very competitive entertainment business.

So the question becomes whats the best way to raise prices, without losing customers?

First, start by taking into account all the factors that influence how you price for admissions and concessions.  Such as, market forces, the economic conditions in your area, competition, and cost-of-doing business (just opening your doors).  This is your start point and provides you a base or break even price point.

Second, if you don't think your customers can handle a direct price increase, than consider how you package your current pricing structure.  Most cinemas already use tiered pricing for popcorn and drinks but make sure your pricing is structured to that it pushes the patron to at least the middle priced item (never have more than three sizes or options from which to choose). 

Third, since you are investing a considerable amount of money into digital cinema conversion, make sure you explain this to your community.  There has been plenty of press (national and local) regarding 'the cinemas' move into the digital domain but it must be emphasized by you.  That YOU are making a commitment to THEM in providing the latest and best way to view the latest movies and other entertaining content.  Contact your local press, TV and radio stations, spread the word on your website, and use all of the social networks you can - this is free and great promotion and sets the way toward increasing prices.

Fourth, be prepared for blow-back!  While you may have every reason to raise prices you should be prepared to explain them, just don't blame the cost of doing business. If necessary show off (yes, offer the moviegoers the opportunity to view the projection room) your new digital projection equipment (your investment) and explain how you and your staff are working hard to ensure they continue to receive the best movie entertainment unavailable in their living room.

Should cinemas raise their prices upon digital conversion.  Well, to my mind, it's worth it, but you must put in the effort to explain the increase and its value. Place yourself in the moviegoers shoes -what they want is very good/excellent movie entertainment with few distractions and courteous and efficient service. If executed properly, the customer will understand and accept the price increase, but it's your job to make 'the sale'.

Good Luck

Best
Jim Lavorato