The Road to Recovery: John Wall Street looks at dynamic pricing on the primary market:
Big Ideas:
- Just because “everyone” is doing it doesn’t make it right.
- There are positives and negatives to dynamic pricing.
- The way that tickets are priced likely needs changing.
Since I just looked at the Coyotes’ ticket prices above, I won’t get into this one nearly as deeply. (Now watch me write 5,000 words on the different angles of pricing.)
But there are some interesting things to look at here.
First, there is this idea that because all of the brokers have been using dynamic pricing tools for many years that it is only right for the primary market to start using dynamic pricing as well isn’t entirely accurate to me.
When you make the dynamic pricing decision, you need to keep a few things in mind.
First, dynamic pricing does allow you to control your pricing more. You can have a chance to capture more of the revenue if an event is hot.
On the flip side, you undermine your brand loyalty. You can teach customers to hold out to see if events are going to move on prices. And, in years before the pandemic, you’d often see fans talk about the dynamic pricing only moving in one direction, up.
All of this undermines the benefits that you might feel you are accruing with dynamic pricing.
So you have to start knowing the upside and the downside of the dynamic pricing discussion.
Second, thinking of the need to dynamically price in the context of the secondary market doing it is wrong.
If you talk to any number of brokers, they are going to tell you the horror stories of dynamically pricing tickets as well.
I’m largely agnostic on the idea of using technology to help you make better pricing decisions, but I do know I’ve heard many complaints about how a seemingly small change in the market can lead to huge runs in the market and the same way fans complain about the dynamic pricing only going up, brokers complain that in a lot of these runs…it drives the price into the ground.
To be clear, this doesn’t just hurt brokers either.
It hurts the brand equity of the primary market as well, even if the primary market provider has nothing to do with the transaction.
Finally, the talk about dynamic pricing and variable pricing begs the question of whether or not the current model of on-sales, season tickets, subscriptions, etc. is up to the challenge and demands of the modern customer.
My belief is that there is a lot of room for real changes in the way that tickets are put on sale to enable teams, theaters, and venues to manage demand more productively.
Some of it can be done by technology and some will need manual intervention, but as we get a better grasp on what the future after the pandemic looks like for live entertainment, the question shouldn’t be: “Do we do more of this idea because we’ve always done things this way?”
Or, does the new question become: “What would we need to know for this to be true?”
Which opens the door to the ultimate question: “Knowing what I know now, how do I achieve my goals?”