Royals adopting "Dynamic Pricing" model for tickets this season

[Deberg_1990]

Interesting.....





http://www.kansascity.com/2013/03/30...t-set-for.html





Prices might change year to year. But within any one season, the price you paid for a particular seat was always the same, whether it was for a meaningless game on a cold night in September or a balmy summer evening in the midst of a pennant run.
Now in 2013 comes a stark change.

The Royals have adopted a new system that already has ticket prices fluctuating like the Dow Jones industrial average, and the home opener is still a week away.
Want to see the matchup with the Washington Nationals on Saturday, Aug. 24? A field box seat was going for $48 last week.

If you bought it last week, that is. No telling what that ticket will be going for on game day. Up one day, down the next, depending on things like weather, pitching matchups and the day of the week.

It’s called dynamic pricing. Travelers are all too familiar with the concept. The hotel and airline industries have used variable pricing strategies for years as a way to encourage customers to make their reservations early.

That’s why what you paid for your plane ticket may be completely different from the person sitting next to you.

Dynamic pricing is growing more common in the entertainment world, too. Some movie theaters are looking at tying ticket prices to demand. Ticketmaster started pricing concert tickets that way in 2011.

Even the Kansas City Symphony tweaks ticket prices when tickets begin growing scarce for a concert with a high-profile headliner.

“It’s done on a concert-by-concert basis,” said executive director Frank Byrne. “Our philosophy behind this is to encourage people to buy tickets early.”

The Royals tested the concept last year on 16 premium games, some of which had already been the subject of premium pricing, such as Cardinals games. This year, the prices for all 81 home contests will fluctuate day to day and across all sections based on supply and demand. Only season ticket holders are guaranteed a fixed price per seat for every game. For everyone else, buying a ticket will be a little like playing the stock market.

Should you decide on a whim to go to a Friday night game when the weather is mild and the Royals happen to be on a hot streak, expect to pay a premium.

But conversely, those dark blue seats will almost always be cheaper in the middle of the week. Unless the visitors have their pitching phenom taking the mound that night. Then fans might have to open their wallets wider, even on a Tuesday.

Baseball isn’t the only sport trying dynamic pricing.
In Minnesota, the NBA Timberwolves have done away with fixed ticket prices. So, too, hockey’s Anaheim Ducks.

But among all the major sports, only in Major League Baseball is dynamic pricing fast becoming the norm. Twenty-one of the league’s 30 teams now have some kind of a dynamic pricing strategy. Five years ago, hardly any of them used computer algorithms to fluctuate ticket prices. Now fully half of the teams have done away with fixed prices for single-game tickets.


“Of all professional sports, MLB teams have the greatest challenge in selling tickets, given the number of seats and number of games played,” said Will Flaherty, communications director at SeatGeek.com, which is both a ticket reseller and market analyst. “No one else even comes close.”

Like all sports, baseball depends on a dedicated corps of season ticket holders for its game day revenue. But unlike basketball, hockey and soccer, baseball’s bottom line depends a lot more on selling tickets one game at a time.

Fewer than half of the seats in your average ballpark are occupied by fans who have bought season tickets. Since the days of wool uniforms and cheap beer, the challenge for baseball clubs has always been to attract casual fans who want to see a game or two during the year.

To do that, teams have used giveaways and promotional gimmicks for decades to attract crowds. But free bobbleheads and buck nights only go so far in building attendance numbers.

Now along comes dynamic pricing.
The Texas-based company that Barry Kahn heads, Qcue, was the first to help teams like the Royals set up dynamic pricing systems.

Convinced that baseball needed to do away with fixed-price tickets, Kahn encouraged the San Francisco Giants to try his computer software on a select number of seats in the 2009 season. The result was a 20 percent jump in sales. The next season the Giants adopted the system across its entire stadium.

Qcue now works with teams in the NBA and NHL, and it provides dynamic pricing support to two thirds of the teams in Major League Baseball.

“You’re probably seeing across-the-board increases of between 5 and 30 percent,” Kahn said.

That’s ticket revenue dollars, not an increase in the number of tickets sold. However, that tends to go up, too. Dynamic pricing doesn’t necessarily make it any more affordable to attend a ball game than before, but it can.

Algorithm plus
For many midweek Royals games this year, those who buy early can get the discounted season ticket holder price, which they never could before, said Steve Shiffman, the team’s senior director of sales and service.

As of last week, that was the case for midweek games during the team’s first home stand of the year.

“The whole focus is buy early, save money,” Shiffman said.
Prices will never be lower than that season ticket holder rate, he said, which means the StubHubs of the world have nothing to worry about. Fans will still be able to go to those websites and secure tickets for some game at a deep discount, far below the prices the Royals are charging.

The team’s pricing system doesn’t rely entirely on computers to make changes. There’s a human factor.

“It doesn’t raise the prices,” Shiffman said of the Qcue system the team is using. “It tells you what it thinks you should do.”

Team officials will make the call a few times a week.
Shiffman gives this example. Say the algorithm shows there’s heavy demand for tickets to a game against the Detroit Tigers. Word is that Detroit’s Justin Verlander is going to be pitching, a guy a lot of fans want to see. The weather forecast looks good five days out, and ticket prices are on the rise on the secondary market.

Based on those circumstances and the computer’s suggestion, the Royals would probably goose up prices for that game.

But by the same token, if Verlander is suddenly scratched and a cold front moves in, the team could ignore the software and leave prices where they are or even lower them in some or all sections.

It’s all about pricing the product appropriately, the Royals say.
“We’re not trying to be greedy,” Shiffman said. “We never want to gouge our fans.”

At The Star’s request, SeatGeek analyzed the prices paid for Royals tickets on the secondary market in 2012, which might provide a glimpse on what to expect in 2013.
On average, prices last year were higher on weekends than during the week, with Wednesday being the cheapest day to score a seat at $20.15 on average.

Matchups with marquee teams cost the most, $56.95 on average to see the Yankees. At the bottom end, tickets to see the Royals play the Seattle Mariners averaged $17.36.
“A lot of times in the dynamic pricing world,” Flaherty said, “you hear a lot of people talk about pitching matchups and weather and all these things, but at the end of the day, the three factors that make a difference is what day of the week it is, who’s playing and when is it in the season.”

How will fans react to the change? So far there hasn’t been much of an outcry here or anywhere else. That’s partly because of the average fan’s familiarity with Internet ticket brokers, experts say. Even Major League Baseball has a contractural relationship with StubHub so that season ticket holders have a convenient way to sell unwanted tickets.
Still, not everyone’s happy.

“The Royals haven’t had success in 20 years and now they want to be ticket scalpers,” one disgruntled Cardinals fan commented on a news website when the Royals first announced the plan last month.

Shiffman said he heard few complaints when the team tried out dynamic pricing last year. Other than with premium games, the price fluctuations will be a matter of a few bucks one way or the other.

All the same, the team plans to evaluate the system both in the middle and at the end of the season before deciding whether to continue using it in the future.
“It’s a learning experience is what it comes down to,” Shiffman said.