Rafi Mohammed

Why are Tickets to See Robin Williams in Concert More Expensive than Jerry Seinfeld Tickets?

Posted on February 2nd, 2007 (0 Comments)

(Doing my best Seinfeld impression): “W-h-y are tickets to a Robin Williams comedy show more expensive than tickets to a Jerry Seinfeld show?

Last weekend was an entertainment jammed weekend. In addition to seeing Bob Seger on Saturday, I saw the comedian Robin Williams on Friday. Mr. Williams played a live comedy show for a Yankee Dental convention being held in Boston. All 3,000+ tickets, ranging in price from $125 to $175, instantly sold out. While his comedy was manic and hilarious, I must confess to being disappointed over the show’s value: 70 minutes on stage and no warm up act. I left curious about comedy show ticket prices. While the Boston show was private (performer’s fees tend to be higher for private vs. public performances - though his show was being sponsored by Crest), the next night Mr. Williams sold out a large public casino hall in Atlantic City where ticket prices ranged from $225 to $275. Since when did comedy shows become so expensive?

Intrigued, I did a little research on comedy concerts and found an interesting pricing anomaly. At most shows Jerry Seinfeld plays, the highest ticket price is $75. Even in Las Vegas, his top ticket price at Caesar’s Palace is $150. Even more intrigued, I did an informal poll amongst friends to gauge who is more popular to see in concert, Robin Williams or Jerry Seinfeld? A strong majority responded “Seinfeld.” The obvious question is if Seinfeld is at least as popular as Robin Williams, why are Jerry’s tickets priced so much lower?

Ever since my graduate school days, I’ve been fascinated with the concept of setting prices in a manner that promotes repeat purchases. Back in my academic days, I used to think the title “The Economics of Repeat Business” would be the coolest for a book or theoretical article. Of course, back then I wore a lot of plaid, had horn rim glasses, and a scientific calculator sticking out of my shirt pocket…

As pricing strategists, we strive to set prices that fully capture the value of our products or services. But how can companies use price to promote repeat business? The answer lies in understanding and capitalizing on a cornerstone theory of economics, the law of diminishing marginal utility.

The law of diminishing marginal utility basically states the more you consume of a product or service, the less you value an additional unit. I’ll go into more detail about this concept in a future blog. This theory applies to purchases made over time. For example, the basic bronze package at my local car wash costs $10. At a $10 price tag, I wash my car once every 2 months. To get me to wash my car more frequently (e.g., once every 6 weeks), the price would have to drop to $8.

So…you may be wondering, what does the law of diminishing marginal utility have to do with pricing Robin Williams and Jerry Seinfeld tickets? The answer lies in the fact that Seinfeld is a “working comedian” and Williams isn’t. By “working comedian,” I mean that Jerry does a large number of standup shows every year and in contrast, Robin doesn’t (primarily works on movies).* Since Mr. Seinfeld regularly returns to a city (in the case of Boston, every year or so), he needs to set relatively lower prices to account for the law of diminishing marginal utility that affects his fans. Since Mr. Williams rarely does standup, he can set high prices without fear of affecting attendance at his next local appearance. Two A list comedians, two significantly different ticket prices…the explanation: the economics of repeat business (I still like this title!)

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*In fact, to warm up for the Yankee Dental show, Mr. Williams came to Boston early and played two last minute announced shows (titled “working on material”) at a small comedy club. You can imagine my (and my fellow Yankee Dental attendees’) “happiness” to learn that ticket prices for these intimate club shows were $25.

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