Mission Related Pricing — a way to increase revenue
Many museums are under pressure: On the one hand they are expected to increase the number of visitors and attract a more diverse population. On the other hand their financial leeway is decreasing. Essential investments in exhibitions or additional research and programming are rarely possible. One of the most common tools to attract more visitors is to abolish admission fees for visitors. As we can see around the world this has an enormous effect on visitor numbers and diversity. A major loss in earned income is the downside and not always compensated through additional funding from local authorities or foundations.
actori analysed alternative pricing models in terms of their applicability and chances of success: Through strategic pricing policies and consequent visitor orientation museums can increase the diversity and number of visitors as well as increase overall revenue.
One innovative pricing policy is Pay-What-You-Want (PWYW). It combines positive characteristics from the most popular models — very good accessibility and the opportunity to benefit from the visitor’s willingness to pay. Diametrically different is the fact that the visitors decide how much he or she is willing to pay and not the museum. As this pricing policy is getting more attention an ever-larger number of museums, heritage sites and other institutions are adapting the model. Studies show that there is potential for an increase in revenue from 30–100% depending on the specific framework conditions.
Most PWYW pioneers in the cultural sector are US museums. A growing number of well-known museums are adapting the visitors and revenue growing pricing policy. Among them are museums like the American Museum of Natural History, the Brooklyn Museum, the Studio Museum in Harlem, the MoMA P.S.1 and the El Museo del Barrio in New York. The Metropolitan Museum in New York proves that PWYW does work in the long run as well. Because of conditions set by the local authorities the MET isn’t allowed to have entry fees. In the early 1970s it has successful adapted to a PWYW pricing scheme.
Mission Related Pricing — a possible solution for several challenges
In reference to the practice of “mission related investing” (the practice to invest only in assets that are in line with an organisation’s strategic goals) we developed a framework called “Mission Related Pricing” especially for museums and non-performing arts organisations. It evaluates all mission related goals of an organisation and considers them to choose which pricing policy for which product or service is best. It highlights the importance of pricing policies in context of the overall strategy of every museum. Because of the big influence of pricing policies on diversity and number of visitors as well as revenue pricing policies should be a top priority of every museum.