Dynamic Pricing In Action

Because the Indians are placing heavy emphasis on dynamic pricing this season, I have begun following ticket prices for this season’s Tribe games. This is what I have learned so far.

To begin with, let me describe the basics of dynamic pricing and the online ticket marketplace as I understand them. The Indians have promised all ticket buyers, including those buying season tickets, that the ticket prices being charged for any given seats at the start of the season will be the lowest prices the team itself will charge throughout the rest of the season for those seats for the game or games for which the tickets are purchased. The average price of $29 per seat per game we paid for our four season tickets in Rows A and B of Section 131 is equal to or less than the lowest price tickets will ever be sold for by the team itself this season in those same rows of that same section. (For obvious reasons, the team cannot assure any ticket buyer that tickets, once they are bought, will not be resold by the buyer later for a lower price.)

The Indians have also said that ticket prices for individual games will be based on market demand for tickets for those games, with the prices for premium games being set at higher levels initially and with prices increasing if and as demand increases for those premium games.

As another part of its pricing program, the team has printed on each of our tickets the face value of those tickets at the start of the season. For example, the face value for our ticket is $40.66 for the home opener and $20.33 for the noon game against the Padres on April 9.

Finally, the Indians have also made it easy for us to utilize the StubHub site if we wish to resell any of our tickets. In the past, one of the worst aspects of being a season ticketholder was being left with tickets we could not use.

Our first experience in disposing of our tickets through StubHub showed how dynamic pricing and the resale market are working. We knew that we could not make use of the tickets for the Saturday, April 5 game against the Twins. So we went to the StubHub site to list and sell the tickets. The site gave us immediate information as to how much other tickets in our section were listed for. Taking our cue from this information, on March 24 we listed and sold the two seats in Row A for $47 each and the two seats in Row B for $42 each. StubHub charged a commission of $13.66 and a MLB transfer fee of $3 on the two seats we sold for $47 each and a commission of $12.16 plus the $3 fee for the seats we sold in Row B. As of this morning (March 30), the best seats available in Section 131 on the team’s website for this game are in Row L and cost $45.

Tickets to some premium games are a hot commodity right now. Earlier today I looked at the prices being charged on the team’s website and the prices being asked on StubHub for the Saturday, June 21 night game against Detroit. This game is Omar Vizquel jersey night (to the first 12,500 people). There are also fireworks and Hall of Fame inductions. Dynamic pricing for this game has already had an effect. The only seats the Indians have left in Section 131 are in Row DD (five rows from the back) and cost $74.50 each. Resellers using StubHub are asking $93.30 each for seats in Row C in Section 131 for this same game.

My own rough guess is that the Indians will derive about three times as much revenue from sales of tickets to this game as the team would have had it used the static-pricing model it used before. Moreover, StubHub returns about 50% of its revenues to MLB, so some of the StubHub money for this game will also come back to the Indians.

My own thoughts about this new approach to pricing are these. First, as a fan I want the Indians to have enough money to field a competitive team, so the fact that it is finding ways to derive more revenue from ticket sales at any particular level of attendance does not bother me. Second, as a season ticket buyer I now understand that the tickets I bought for the June 21 game and other premium games have become somewhat valuable, so I can recover part of the cost of my season tickets if I choose to sell the tickets to these games, which makes it easier to justify buying season tickets. Third, I understand that the Indians still charge one of the lowest average ticket prices in baseball, so I do not believe that dynamic pricing is having much, if any, negative effect on relative attendance figures since most of the teams are now using dynamic pricing and attendance in other cities continues to outpace attendance here. Finally, I don’t think that this pricing system is unfair to the average fan since there are many games which fans can attend (particularly in April or May) for which decent seats are available at a very low price on either the team’s website or on StubHub.

Incidentally, if you still want to go to the home opener StubHub is listing tickets in Section 131, Row W. They will cost you $99.89 each.

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