SF Giants Test Dynamic Ticket Pricing
from the one-day-sale dept
The San Francisco Giants are experimenting with software that dynamically prices baseball tickets, adjusting prices based on demand, weather, and even other factors like who's scheduled to pitch on a particular day. Many teams already charge different prices for seats based on the opponent or other factors, but the Giants are trying to manage ticket revenue much like airlines and hotels price their products: charging a premium for in-demand seats, but lowering prices when necessary in an attempt to fill available space. For instance, in a recent series against the Mets, some bleacher seats that regularly go for $17 each varied in price from $15 to $33, depending on the weather and pitching matchups. So far, the Giants are testing the system on just 2,000 outfield seats in their 41,000-seat stadium, wary of upsetting season-ticket holders by offering similar seats to other buyers at lower prices. They say so far, they've increased sales in those seats by 17 percent over last year, but it's too early to tell if that's solely because of the pricing system. On one hand, it's easy to see some people getting upset by the system, but on the other, a case can be made that the seats offer different levels of value on different days, and should be priced accordingly. It's essentially the same system, just a little more scientific, as that used by scalpers, and they find no shortage of willing buyers. If the Giants have a lot of success with their efforts, look for similar systems to quickly catch on with other sports teams.
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Filed Under: dynamic pricing, sf giants, tickets
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Now if we can just figure out a way to securitize those options...
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But as far as sports tickets go, ticket prices are high enough as it is. It would suck to gouge fans even more by charging higher prices for the games (and players) people want to see more.
Once again, we see how it's not good enough to make a huge profit, they have to find ways to make a GINORMOUS profit.
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Had the same thought regarding pricing movies based on reviews (or, even length of movie - a 3 hour movie can get less showings than a 90 minute one).
But, if a movie is priced at $1, is the cheapness going to outweigh the foreknowledge that everyone thinks the movie isn't worth your time? Hard to say-- for a sporting event, it's different. Enough to do at a ballpark outside of watching the game, and weather, bad pitching matchups, bad teams can't always predict accurately how good the game will be.
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Only half kidding.
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"Variable pricing" really is quite often just a sneaky way to raise prices without raising quite as many eyebrows. The iTunes store is a perfect example of this -- they went from $0.99 a song for EVERY song in the store, to $1.29 for premium tracks and $0.69 for less in demand tracks. This sounds great on paper, until you realize that almost anything you would want to buy is going to be $1.29, so they just effectively raised their prices by very close to a third, while being able to avoid a bit of heat from the press and the loss of too many customers.
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You have no concept of how markets work. If ticket prices rise and people pay those higher prices, that new higher price is the correct price. There is nothing unfair about selling your product or service at a price someone is willing to pay.
Let's assume you're selling a used car at an asking price of $9,000. Two people show up, one willing to pay the asking price and one willing to go higher. Of course you sell to the guy willing to go higher. And that's completely fair. That's how capitalism is supposed to work.
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The supply far outweighs demand. At $15, a bleacher seat on a monday night game is still massively overpriced. try $5, they might see a few more people in the seats (buying popcorn, hot dogs, beer, and whatnot). heck, use the Mike model, seats are almost infinite, so why not give them away for free with the pre-purchase of a hot dog, chips and a drink for each seat?
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The reason they don't sell $5 tickets is because it would lower all the ticket prices throughout the entire stadium. Sure, more tickets would be sold, but over all less money would come in.
Here's an example. Let's assume that tickets sell for $75, $50, $25, and $17. If the $17 cheap ticket suddenly were only $5. Then a lot of the people paying for the $25 and and even the $50 tickets would buy the $5 tickets, because the saving would be substantial. There's not much difference between $25 and $17, but there's a huge savings between $25 and $5. Especially if you're bringing your entire family.
Because fewer people would be buying $25 tickets, those seat prices would have to be lowered to increase demand. Which would mean that people buying $50 tickets would by those new cheaper seats. Which means that fewer people would be buying the $50 tickets. Which means those tickets would have to be lowered to increase demand.
Pretty soon even the prices on the boxed seats would have to be lowered.
Baseball stadiums would rather have a fewer number of high paying customers than a large number of lower paying customers.
To me it's a good short term goal, but new fans have to come from somewhere. And if an entire generation of boys grow up never going to a baseball game, it's unlikely they'll be fans when they grow up. Basically MLB is pricing out future fans.
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This happens on every flight and the airlines seem to survive.
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Dutch Auction
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That might actually work. There would still be an incentive for people to quickly buy the better seats at a higher price while leaving plenty of cheap seats for everyone else.
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zito
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Good topic
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Nice topic
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