Bon Jovi said “The only thing I like more than my wife is my money.” It’s rare that you find a rock star that likes his wife, but even more so to find one that actually practices what they preach.
While flipping through the June 6th 2011 issue of Forbes, I was surprised to learn just how talented Bon Jovi was at making money. Over the past 12 months his earnings trounced Donald Trump, Tiger Woods and yes even the high pitched Justin Bieber. Bon Jovi’s continued success at generating outstanding returns has been fueled by his ability to produce great music and leverage the power of pricing.
Bon Jovi’s First Pricing Lesson – Know your customer base
The band’s US fan base has an average household income of approximately $79,000. As a comparison, Justin Bieber and Metallica average household income sit at roughly $71,000. The differential indicates that Bon Jovi ticket prices can be positioned at a premium to competition.
Bon Jovi’s Second Pricing Lesson – Pricing segmentation is key
Like any business, the band has a very diverse group of customers with different needs. It is important that their pricing strategy reflects this. The band offers everything from nosebleed seats that cost roughly $50 to VIP packages at a cost of $1,275 per seat, where you actually get to take the seat home after the show! Bon Jovi shows can have as many as 20 segmented price points versus Nickelback who typically only utilize 3 to 5.
So what do all these price points allow the band to capitalize on? Well, pollstar.com reports that Bon Jovi realizes an average ticket price of $92.65 versus Nickelback at $64.14. That means for a comparable arena, assuming a constant cost base per ticket, Bon Jovi would realize roughly 40% more profit than a Nickelback concert.
BJ’s Final Lesson – Know your personal value and don’t be afraid to charge for it
Jon Bon Jovi is a workhorse. He manages, writes, performs and crafts the strategic direction for the band. When dividing earnings, his share is much larger than fellow bandmates. This is a stark contrast to other bands such as U2 who split proceeds evenly. Jon Bon Jovi clearly knows his worth and is not afraid to charge for the value that he is bringing to the table. Too often we find businesses that are almost embarrassed to ask for the price they deserve.
So the next time you are struggling to close a budget shortfall or generate incremental profits, pop in a Bon Jovi CD, turn the volume way up and think about how to improve your pricing.
Paul Hunt is the president of Pricing Solutions, an international pricing strategy consultancy dedicated to helping clients achieve World Class Pricing competency. Paul publishes a monthly pricing column in the FP Executive. He also writes for the Pricing Solutions Club.
