Brewers to test demand-based pricing

[owbc]

LINK

 

 

The Milwaukee Brewers announced Monday that they would test market a

demand-based pricing system for three games later this season.

 

Here's how it works: Using computer pricing software linked to the

Brewers ticketing system, the Brewers will adjust the price of a game

ticket in real time based on ticket purchasing demand and other factors,

including team performance, pitching matchups, even the weather.

"Demand-based pricing not only gives us greater day-to-day ticket

pricing flexibility, but also broadens the ticket-buying fan base," Rick

Schlesinger, the team's chief operating officer, said in a statement.

"It rewards fans for buying earlier in the season and protects season

ticket-holder value. We believe this structure will help us reach more

fans with attractive pricing options for seats that currently goes

unsold."

Demand-based or dynamic pricing has been tried by a number of

professional sports franchises. In San Francicso, there have been price

fluctuations for certain games based on the weather alone. In other

cases, the prices for game tickets can fluctuate upward because star

pitchers like Tim Lincecum are on the mound.

The test games will be Aug. 31 against the St. Louis Cardinals; Sept.

10 against the Philadelphia Phillies; and Sept. 26 against the

Pittsburgh Pirates.

Only the loge bleachers and loge outfield section seats will be used

in the test. Fans can visit brewers.com, select the "Tickets" tab and

then click on demand-based pricing to purchase tickets. The games are

already on sale.

 

I understand that the main reason for doing this is to narrow the gap between the scalped price and the face value. But how often do Brewers tickets sell above face value? 3-4 games per year maybe?

 

It could also be seen as a disadvantage to those who travel from out of the Milwaukee area to Miller Park and can only make the high-demand Saturday and Sunday games. For those in the Milwaukee area or those that frequent weeknight games, will the increase on weekends come with a corresponding decrease in prices on weeknights? Or is it more of a hidden ticket price increase?

 

Does anyone have any firsthand experience from other teams that have tried this?

[liveforoctober]

I'm skeptical... only because I can see ticket prices rising at any moment for most any reason, (ex. We just took 3 of 4 from Pittsburgh, Fielder has homered in 3 straight games, Braun is approaching the 30/30 plateau, etc.) but how soon will they decide to drop ticket prices for games (especially if we are in the chase) if they can probably rely on a pretty big walk up crowd?

 

I'm about 2 hours from the stadium and yes, if I could get $5 tickets the night before a game I would grab my friends more often to do so... but I don't see them slashing the prices up until about first pitch.

[adamb100]

So what happens if the team is performing poorly? Do tickets go below face value then?

[owbc]

So what happens if the team is performing poorly? Do tickets go below face value then?

That is a good question. I think so. But the question is how low/high can the prices go. I would guess about 25% either way, but if their goal is to get people in the seats, I could see them giving away terrace seats for $5 for late season games when the Brewers are out of contention.

[And That]

So what happens if the team is performing poorly? Do tickets go below face value then?

A combination of poorly and/or day of the week and/or weather and/or pitching matchup and/or opponent, but yes, tickets will definitely be sold below face value.

 

Dynamic pricing tends to reward people that buy well in advance. By waiting to buy closer to game day, you're taking a risk that the ticket prices will drop because the Brewers will be playing crapily (and why would you want to see them then anyway?), Dave Bush will be signed and starting that day, or something else. Of course, the Brewers also win because they get your money earlier. The more tickets they sell in advance, the more money they make (at least, theoretically).

 

It also provides a chance to get really cheap tickets very close to the game.

 

It's a good pricing model that many online businesses have had great success with. It remains to be seen how popular it will be with the fan base, though, as people will have concerns about when to buy tickets, how they might be getting ripped off, etc.

[JohnBriggs12]

Obviously the Brewers are trying to maximize revenue by in effect scalping their own tickets. But this carries a downside risk for them. In recent seasons they've been able to lock in revenue through season ticket and preseason single game ticket sales made at a time when generally optimism reigns. Even if the team tanks, this money is in the bank. The season ticket purchasers, many of whom intend to sell a portion on the secondary market carry all the risk and yes they can profit if the team contends, but generally they sell at a loss, if they can sell at all late in a disappointing season.

[DHonks]

this is quite common in other areas, such as airline fares and golf teetimes. If you look at teetimes in Las Vegas in the summer, the price differences can be very huge throughout the day

[bjkrautk]

I can't help but notice that they've picked three games that would all be expected to go up in price through demand-based pricing, as they're games against 2 divisional rivals, and the Phillies (who are also post-season contenders).

 

 

That said, I will give them a modicum of credit for only including one weekend game in the experiment. Additionally, that Pirates game on a Monday during the last week of September could has to have about as much swing in value as any ticket in the 2nd half. A Brewers losing streak or the Pirates reverting to expectations may adversely affect ticket prices. I'm sure, though, that the Brewers are hoping that the playoff spot will be up for grabs between the two in the last week, sending that price through the roof (or as 'through the roof' as you're likely to find in demand for a Monday night home game).

[dlk9s]

I think a lot of people will be really pissed about this because they are so used to fixed prices and are averse to change. But really, demand-based pricing is what I deal with every time I look to buy tickets on StubHub, eBay, Craig's List, or some other online ticket broker. It's been awesome when the Bucks have been in town, as I've paid less than $10 per ticket after fees for very good seats. And when the Packers were here in Atlanta during the regular season last year, I got tickets for half-price the morning of the game.

[And That]

Obviously the Brewers are trying to maximize revenue by in effect scalping their own tickets.

They're not scalping their own tickets. The Brewers are the market maker in Brewers ticket prices and the tickets are being sold in the primary market.

 

There's no third party/secondary market stuff going on here. You can't scalp your own tickets when you're selling them in the first place. They are setting a price, and it's a price that happens to move. That's all.

[owbc]

Right now, the loge bleachers for September 26th are going for $10, loge outfield for $20. So the prices seem to really benefit buying far in advance.

[JohnBriggs12]

Obviously the Brewers are trying to maximize revenue by in effect scalping their own tickets.

They're not scalping their own tickets. The Brewers are the market maker in Brewers ticket prices and the tickets are being sold in the primary market.

 

There's no third party/secondary market stuff going on here. You can't scalp your own tickets when you're selling them in the first place. They are setting a price, and it's a price that happens to move. That's all.

In effect they are scalping. Not literally of course. But if the demand is there, the prices will be higher for the same ticket that could have been bought earlier for less. I'm not begrudging them for doing it, just pointing out the net effect for the ticket buyer.

[pebadger]

They aren't scalping. Practical concerns virtually require that they set fixed prices for their tickets in order to mximize revenues. They will attempt to set those prices as close to what the market value of those tickets will be on game day. (You already see this at work in how "premium series" are priced.) No matter how well those prices are set, there will always be a difference between the two. They are just attempting to capture more of the difference between the fixed price of tickets and their actual value in the marketplace, rather than completely ceding those revenues to speculators. If the Brewers are willing to sell tickets for less than "face value" when the market so dictates, they are doing fans a service by undercutting speculators, making scalping a bit more risky and thus less attractive in the long run. In theory the Brewers should be better situated to take on the risks associated with dynamic princing than are individual speculators. These advantages are currently outweighed by the advantages speculators curretnly have in being able to respond more quickly and efficiently to consumer demands. As technology improves, and it will, clubs will be better able to employ dynamic pricing systems. As well they should.

[panthernick]

Not to totally take this off topic, but does anyone know what ever happened to the mlb wide presale of playoff tickets? I remember them doing this last year but haven't seen anything for it this year.

[Patrick425]

LINK

 

 

 

I understand that the main reason for doing this is to narrow the gap between the scalped price and the face value. But how often do Brewers tickets sell above face value? 3-4 games per year maybe?

I'm a 20 game season ticket holder. We have the Saturday package which is basically all the Saturday games and some Friday games. Because of my son's baseball (and other youth activities) schedule, we are unable to attend anywhere from 3 to 7 of these games each Summer. In the past I would exchange these games we could not make for other games that we could. However, since MLB partnered with StubHub 3 or 4 years ago, it has become very easy for me to recoup some of my Season ticket costs by selling the tickets on that site.

 

I would guess that I have sold tickets to about 20 games (3 seats a piece) over the last 3 or 4 years. I would also guess that I have made a profit (even with the 15% StubHub fee) every time with the exception of maybe 2 or 3 games (4 games tops). Some of this may be due to the fact that I'm selling almost exclusively weekend games (where the attendance is almost always near or above the 40,000 mark and also that these are family section tickets in the lodge level behind home plate. Because there are only 3 (?) family sections in all of Miller Park, there may be some that are willing to pay a premium in order to try to avoid the possibility of sitting near any inebriated fans.

 

I would say there are more than 3 or 4 games a year that could sell above face value depending on where the seats are located.

 

 

 

[panthernick]

I sold for the first time on stubhub this past weekend. Couldn't make Saturday's game for my 20 pack. Made about 40% over what I paid for them even with all of the fees. I was shocked.

[And That]

In effect they are scalping. Not literally of course.

Not only not literally, but not at all. They are merely setting dynamic prices to (hopefully) maximize revenue. That's not scalping - that's revenue optimization. Scalping is re-selling. There's no re-selling going on here.

 

I bought an air filter from Amazon a few weeks ago. A couple days later I noticed the price of the air filter had dropped about 10 cents. Did Amazon scalp their own air filter?

[ecjimg]

Wow I need glasses. I read it as demand based pitching .....and thought "what the heck is that going to be!"

[igor67]

Demand base pitching, everyone in the crowd gets a clicker to select the next pitch http://forum.brewerfan.net/images/smilies/smile.gif

[beno78]

Doesn't look like the prices will go down... from whatever they set as the original "demand price". So it doesn't look like the later you wait the better the price. You can get in early at the low price or if it isn't a "high demand" game you can get that same low price later (baded on availability), but not going to keep going down.

 

From the full story on Brewers.com

 

"Pricing for seats in those locations for the three games is subject to change and fans should be reminded that the best deals will most likely be found early as the price will never be lower than the initial offering."

[FVBrewerFan]

No, I think we all understand it's not scalping since

there's not a 3rd party involved. But the pricing method is the same as

scalping. Higher demand, higher price. Lower demand, lower price.

[And That]

No, I think we all understand it's not scalping since

there's not a 3rd party involved. But the pricing method is the same as

scalping. Higher demand, higher price. Lower demand, lower price.

That comes much closer to describing the economics of a free market economy than scalping.

[bani1717]

I think that's because scalping basically is a free market economy at work. The negative image of scalpers is largely due to the fact that (a) some of them are low-lifes and (b) they sell at market value - which means they sell higher than face value for the games people actually care about, but when people aren't paying attention to the worse games they'll sell tickets dirt cheap.

 

In any case, the big difference between demand-based pricing and scalping, in addition to the fact that the Brewers are selling their own tickets, is that the price will never go down. When looking at scalped tickets, prices may fluctuate up or down. It's definitely smart of the Brewers to try to get people to lock in savings early with the guarantee that prices will never be lower than their initial price. However, people who really want tickets will still buy them without that guarantee - people buy overpriced tickets from brokers/scalpers/stubhub/ebay all the time just to guarantee they have the tickets they want and be done with it. So the Brewers could maybe sell more tickets if they lowered the prices as necessary as the game got closer.

 

Either way, I think full-time demand-based pricing would result in both more money for the Brewers and more fans in the seats (due to prices less than the current face value for the games that are tougher draws).

[pebadger]

Not being willing to lower prices actually helps the scalpers. Scalpers now know that they can't be undercut. If anything, there is an incentive for the scalpers to get in early. If demand for a given game gets high they will actually be able to undercut the ticket office and still make a very nice profit.

[bani1717]

To evaluate the overall effect on scalpers, there are basically a few things that can happen with the price of tickets under demand-based pricing:

 

(Please note "current face value" refers to the 2011 single game ticket prices, whether they be regular or marquee games.)

 

1) The price starts and ends lower than the current face value on tickets.

This will hurt scalpers, I think. For these games, scalpers will be able to buy tickets even more cheaply from fans than they already do. (It's easier to buy a $10 ticket for $5 than it is to buy a $20 ticket for $5.) However, they'll also have to sell their tickets for drastically less than they otherwise would've. So their profit per ticket goes down. And they'd have a hard time making it up in bulk, since this is a type of game that isn't in very high demand.

 

2) The price starts lower than the current face value, but then rises to at or above the current face value on tickets (potentially meaning the game is sold out).

This will be where scalpers make their biggest money. They can buy tickets for cheap either from the ticket office or from random fans who bought their tickets very cheap. They can then turn around and sell these for decent money. Chances are this will be a game where there are plenty of extra tickets that fans have (since prices started out cheap), and where demand is high enough that they could sell a bunch of tickets in the parking lot or online or wherever, and for a price that's a decent amount higher than their purchase price.

 

3) The price starts at the current face value and stays the same.

No change relative to what we have now.

 

4) The price starts at or above the current face value and rises (most likely meaning the game is sold out).

Here, I think scalpers will make decent money but in a more hit-and-miss fashion than in situation #2. They'll still be able to pretty easily buy tickets for cheaper than the gameday face value (either from random fans or from the Brewers), but not as easily or as cheaply as in situation #2. This is because many fans will recognize that this is a higher-demand sold out game and won't part with their tickets for too much less than market value, at least relative to situation #2. That said, for the tickets that scalpers to pick up, they'll make very good money on those.

 

So what I think we'll see is fewer scalpers for the real low-demand games (since the Brewers are now competing with them at lower prices) and more scalpers for games where ticket prices have risen (ie, situations 2 and 4 above).