Price is one of the elements in a marketing mix. It is one of the most flexible elements that directly impact the profitability and cost-effectiveness of a firm over the short term. Sport business organizations have been using analytics to inform their ticket pricing decision-making process. The level of demand combined with direct feedback from consumers helps these organizations develop the most suitable pricing strategy while also enabling them to customize their ticket promotions. Sports business organizations can use tier pricing strategies, dynamic pricing strategies, or variable pricing strategies when pricing their tickets. The pricing strategy is employed to ensure organizations maximize their profits. Sports business organizations will use different pricing strategies when setting prices for game tickets, which will depend on different factors like competition, weather patterns on the game day, and the wins/losses record of the home team
There are a variety of different pricing strategies that can be used by different sports organizations. A pricing strategy is targeted at defined customers and against the organization's competition. The usage of any type of pricing strategy on tickets is dependent on the organization selling the tickets as they know their consumer behavior. The consumer behavior will then inform the company on which regions will be well suited for different strategies to maximize their profits and engage consumers (Harrison, & Bukstein, 2016). Tier pricing strategy is a system that companies use when trying to sell their products within a particular price range. This strategy helps companies provide their goods and services at different price points by limiting and expanding the features customers will be provided when they purchase products from the different tiers available.
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The variable pricing strategy is a pricing method where the firm places the different prices for products based on sales location, date, region, or other factors. Using this strategy, it is possible to have two different sales regions with different pricing as the organization charges for its products depending on the willingness to pay for the consumers (Harrison, & Bukstein, 2016). This type of pricing strategy can be appropriate for organizations that have popular products that are in high demand. The organization will also charge different prices for its products, depending on the region. The price set, although varying in location, is fixed once made available to the consumers. A good example of this strategy would be charging different prices for a game against Chicago Bulls than for a game against the LA Lakers. Here, the organization selling the tickets charges dramatically different prices for tickets located within different sections of the ballpark. Some variables that may lead to this strategy include the opponent the team will be playing, the wins/losses record of the home team, and the competition round in which the teams are playing (Harrison, & Bukstein, 2016). These factors will create demand for the tickets and thus determine the pricing of the game tickets.
Dynamic pricing for tickets is seen when clubs set the tickets' initial price for their respective games. However, the price is flexible and not fixed in time. This allows for price changes between the moments the tickets are put on sale to when the game begins. Dynamic pricing strategy allows sports teams to make real-time adjustments to their ticket prices depending on consumer and market demands (Harrison, & Bukstein, 2016). The strategy's flexibility allows companies to price products and shift product prices to meet consumers' exact needs. A good example of this strategy is when pro baseball teams like The Houston Astros adjust their ticket prices daily after their team world series victory in 2017 (Durgin, 2018). This type of pricing strategy is used depending on several variables such as the day of the week the game is played, weather conditions on the game day, and competition from the resell market places which determine their unique prices of reselling the tickets (Harrison, & Bukstein, 2016). These variables impact the price of the tickets as they can increase or reduce their demand.
References
Durgin, T. (2018). How dynamic pricing is changing sports ticketing. Access. https://access.intix.org/Full-Article/how-dynamic-pricing-is-changing-sports-ticketing#:~:text=Dynamic%20pricing%2C%20the%20ability%20to,and%20even%20pitching%20match%2Dups .
Harrison, C. K., & Bukstein, S. (Eds.). (2016). Sport business analytics: Using data to increase revenue and improve operational efficiency. CRC Press.
