Dynamic Pricing Explained
The entertainment industry recently revealed a new pricing strategy, dynamic pricing. Simply put, the price of the goods is reflected based on consumer demand. In economics, this term is refereed to as price elasticity of demand (PED). According to PED, when a product is in high demand, the price increases. When the demand is low, the price decreases.
This rule also applies to sporting events. You’ll see variable prices on identical seats to different games. Tickets to a Friday night game will likely cost more than a Wednesday afternoon game.
Even though dynamic pricing may be a new development in the ticket industry, it is clear that there is nothing new about the strategy. A few savy executives from sports club took the concept and applied it to their games. Major League Baseball was one of the first professional sports league to reveal this unique pricing.
So how does this work?
For this case study, we will examine the Atlanta Braves ticket prices.
The Braves joined the trend in 2012. Now, there are dozens of MLB teams that employ this technique. We take an inside look on how the pricing is reflected for each game.
Atlanta has divided their games into six levels.
2014 Pricing Tiers:
- Diamond – most expensive
- Super Value – least expensive
Seats Analyzed: section 401, row 1 at Turner Field
Baseball has more home games than any other sport. Therefore, utilizing this pricing pattern is very effective when teams sell mini-plans or individual game tickets.
More and more basketball and ice hockey clubs are beginning to employ this technique. You’ll even notice the patterns on individual tickets to football games. For example, pricing for the Falcons vs. Saints game are much more expensive than the Falcons vs. Cardinals.
Dynamic pricing is a great way for fans to see games without having to put a hole in their wallet.