Mastering Your Prices
Pricing strategies are one of the most polarizing and subjective areas of the live events business.
Our staff has over 15 years of pricing expertise across different verticals: major league sports, minor league sports, museums, concerts, and pretty much every type of live audience business you can imagine. As experts in this area, we wanted to share some approaches and strategies to consider. Ultimately there is no one size fits all approach, but there are ways to continue evolving and improving pricing strategies to benefit of your revenues, attendance, customers, and brand.
Lesson 1: You Are Probably Underpriced
Affordable, family entertainment is a pillar of the minor league sports world, but that doesn’t have to mean bargain basement prices across your venue. With the right pricing alignments, and dispersion in your price offerings, there’s a price point for everyone. In many cases some fans are willing to spend more for enhanced sightlines, special access and/or extra amenities – so take advantage. Having the right pricing strategy keeps fans happy while also allowing the organization to optimize revenues. This creates a healthy business that in the end is to everyone’s benefit. In our experience organizations often operate with a healthy dose of fear which depresses prices and creativity. Unless there is horrible misalignment in pricing we recommend that franchises charge at least an inflationary increase in ticket prices on some regular cadence (i.e. each year). This offsets rising costs and again forces the organization to stay hungry in providing the value to fans.
Last point on this premise: don’t be shy to reduce prices in targeted areas. It creates a great story and can allow you to tap into a brand new fan segments with some fun, creative marketing.
Lesson 2: Your Venue Scaling/Seating Chart Likely Needs an Overhaul
When’s the last time you did a detailed review of your seating map analyzing the demand indicators to correctly set your pricing map? Do you have too many price levels? Not enough?
At StellarAlgo, we believe that although each row or seat block in your venue has different demands, it’s neither practical nor beneficial to set prices for each and every seat. At the same time we believe organizations can be overly simplistic in their approaches. Creating a variety of seating prices, ticket products, and amenity offerings provides variety that will allow you to attract and retain different kinds of buyers.
One good way of evaluating your demand is to use the price level filters in your StellarAlgo Venue Heatmap to determine whether sections are homogenous by price level but differ significantly in STR. We don’t recommend large re-scales every year but every few years it’s smart to take a look and make sure that demand is equally distributing itself through your venues price levels.
Lesson 3: Match the Art to the Science
Anyone that tells you they’ve created a silver bullet for calculating optimal price points from ticketing data isn’t telling the truth. There is tremendous value to the many years of experience that most ticket sales and marketing personnel have about their fans and what they are willing to pay. This knowledge, when enhanced with data, creates an extremely powerful combination and often gives executives the courage they need to push price levels to levels that are acceptable to fans while also maximizing revenue.
Lesson 4: Variable, Dynamic and Other Important Pricing Approaches
You have to listen to demand and come up with pricing strategies that allow you to distribute demand evenly and optimize revenue for your events. This means charging the right fans the right prices for the right products and events.
Variable pricing is the practice of amortizing the price of a package across events, based on demand. This practice has become commonplace as it creates additional flexibility for individual ticket pricing decisions during games of different demand. For example, if a lower percentage of a full-season ticket holder’s price is allocated to a low demand game it will allow the property to keep individual ticket prices low without dropping below those of the full-season ticket holders. Typically, big league sports teams are now looking at over 5 different game tiers to accurately reflect demand patterns.
Dynamic pricing is the practice of changing individual game ticket prices over the course of the season to maintain alignment of ticket prices, with demand being observed on both the primary and secondary markets as the season progresses. Although sometimes daunting at the outset, moving forward with dynamic pricing practices has proven successful in growing revenues and maximizing sell-through rates from individual ticket sales. Dynamic pricing’s prevalence in industries like air travel and hotel has made buyers more conditioned and less reluctant to accept these types of approaches.
Dynamic and variable pricing approaches can be ones that start slow and build toward full-blown adoption.
Other pricing and product strategies such as loaded tickets, flex package ticketing, and others can create new, exciting unique products at unique prices can attract and retain new kinds of fans. Ultimately having price points and products that are attractive for an ever changing fan base will allow your property to maximize the lifetime value of fans.
Lesson 5: Selling It Through
The best data, pricing models, and seating maps in the world can’t make up for poor roll-out and execution. Organizations must be aligned from top to bottom in terms of desired approaches to pricing. Gaining buy-in and having understanding from all levels of the organization early in the process will speed up the decision-making process and allow you to get renewals out in a timely fashion as well as prepare the right marketing messaging for any pricing changes that actually should occur in the end. Having transparent and supportive talking points and messaging together to communicate to your fans will go a long way in building the trust that will allow you to maximize retention rates and ultimately, the customer lifetime value of all fans.