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Friday, June 20, 2014
‘Dynamic Pricing’ May Be To Blame For Empty Seats At Kauffman Stadium
Are you sure its not Mike Moustakas’ strikeouts?
“If you’re a diehard to your team, you’ll show up,” said Moffitt a Royals home game.
But plenty of diehard fans during the most recent homestand did not.
The St. Louis Cardinals last week drew less than 30,000 in each of their games at Kauffman Stadium. That hasn’t happened since 2007.
For Tuesday’s game against the Cleveland Indians, the 25,000-plus attendees exceeded two of the three games against the Yankees.
Royals Director of Ticket Sales Steve Shiffman closely tracks those numbers.
“Attendance is a big factor,” says Shiffman. “In Major League Baseball, they judge you by attendance and they also judge you by revenues.”
And more revenues are created by variable ticket pricing or, as the Royals call it, “dynamic pricing,” which is underway for the second year. Seldom in the present day are two games priced alike….
Twenty-seven of the 30 teams in Major League Baseball have transitioned to variable ticket pricing for single game tickets. The Kansas City Chiefs announced last month they’re heading in that direction, too.
RoyalsRetro (AG#1F)
Posted: June 20, 2014 at 09:54 AM | 76 comment(s)
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Tags: dynamic pricing, revenues, royals
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1. ERROR---Jolly Old St. NickI really don't get this. Are you annoyed that restaurants charge different prices for a steak and a bowl of pasta?
I really don't get this. Are you annoyed that restaurants charge different prices for a steak and a bowl of pasta?
I would be if it cost the restaurant no more to put a steak on my plate than a bowl of pasta.
So, you must never eat at popular restaurants. They're going to charge you more for the same item than less popular ones.
Look, if fewer people are coming to the park - despite your team being higher in the standings than it has been in a very long time - then your prices are too high. End of story.
Or, if you don't care that the park isn't full then...shut the #### up about the park not being full.
You don't get to go all PhD economist talking about dynamic pricing and expected revenue and then ignore supply and demand. You want more people? Lower the damned price.
Yup. It sounds like they've got their algorithms wrong.
This is a bad analogy. They are charging differently for the same bowl of pasta depending on what night of the week I go. Which in theory is fine, as I said, but annoying. It is a blatant attempt to extract ever more money from me. I prefer naked greed to instead have clothes on, and preferably buy me flowers, candy, and maybe even a nice meal first, before having its way with me.
I have no problem with prices rising when overall demand causes there to be a shortage of the fixed supply. However this is not that, not really, this is an attempt to figure out the amount of value I get from attending a game and extract every penny of that value from me, leaving me the bare minimum to make it worth it to attend. Yes that is fine capitalism and as an economist I applaud, but as a consumer my distaste for the process pushes what little value I am getting from the transaction (benefit - cost) to be negative and thus makes it not worth going without some other bonus (special personal event or what have you).
Other people are free to feel differently, of course, but that is how I feel about it.
This. Dynamic pricing makes sense to me. But if people aren't coming out, its not our fault, you set the prices wrong.
You are getting the same pasta, but they've upgraded the live entertainment from a meth addict drumming a paint bucket to the Oak Ridge Boys. They're gonna charge more for TORB.
You knew you were taking a risk by waiting to buy tickets until the student rush price kicked in (and there were never enough seats for the weekend games to guarantee anything decent), but it was basically found money for the team (plus a great show of "team spirit" for supporters.
Exactly. I think of that whenever the annual ######## and moaning comes out of Tampa.
At least the meth addict drumming won't leave you with that damn "giddyup" riff from "Elvira" in your head for the next week.
Yeah, I laughed at this. Now let me rush to apologize profusely before all hell breaks loose.
Too late, you ####### psychopath.
I Think lots of people still are under the impression that the secondary market for event tickets is always more than face and/or unreliable.
As McCoy notes, none of this interests me because I tend to go to midweek games against Seattle and Tampa Bay, and those tickets are always the bare-minimum six bucks on StubHub (as opposed to $11 minimum from the team). It's been a while since I bought a ticket directly from the team's box office.
On the general principle, hey, whatever. It's not nearly as volatile as buying air tickets or booking hotel rooms (two other businesses where once the day is past, the product vanishes).
I got an email from the Rockies a couple of days ago offering a bunch of pretty good seats for next Tuesday night's game at $6.40 apiece. It was supposedly an Internet-only offer, act now before they're all gone!, yada yada yada, but it was clearly just what you're saying: charging less for a game that turned out to be not so attractive.
Sell 30k tickets at 10 extra dollars and that is 300,000 dollars in extra revenue. If it costs you 5,000 tickets at an average price of $25 that is $125,000 so you are up $175,000. So for this to be a breakeven scenario we would have to assume that those 5,000 would be ticket buyers would have spent $35 each at the game in some form other buying tickets. That is a tall order thus why we have variable ticket pricing.
The only thing that's kept me as interested as ever in baseball for the past dozen years is the coming of the ExtraInnings package. Variable pricing is only one part of many that have made going to the ballpark seem like walking into a convention of pickpockets, but being able to avoid all that and still be able to watch any game I want more than makes up for the decline™ of the ballpark experience.
The Dodgers are national draw, and very rarely ever come to KC.
Parking is the big revenue generator. I think its $12 now, with no mass transit or walk-ups to eat into profits.
Supply and demand determines the price of a good not the cost of making the good. We would probably have much more widespread variable pricing in the food service industry if the vast majority of sellers all got on board.
The other angle is when you start discounting tickets, people start to expect that. So that factor drives some of the tolerance for leaving seats empty rather than discounting and trying to make it up off concessions and parking.
Nobody seems to have a problem with restaurants charging much higher prices for the same food when its on the dinner menu rather than on the lunch menu. Yes, sometimes the dinner portions are larger, but not by the same percentage as the increase in price.
There is a great sushi place in DC, perhaps the best sushi place in DC, which slashes the prices almost in half for lunch and give you the exact same thing as they do for dinner.
Likewise, does anyone have a problem with the prix fixe on Mothers' day, Valentine's Day, New Year's Eve, etc.?
My gosh yes. I pay $6 for a ballgame but $15 to park. Parking passes on StubHub can go for $25-30, I presume so you can get a prime tailgating spot in the season-ticket-holders' lot. Get comfortable enough out there and you can avoid the game entirely.
You're annoyed by sales, specials, and promotions? Jesus f*cking Christ, you're even more retarded than I thought you were beforehand.
As an economist, this is a major pet-peeve of mine. The price you pay for something has something, but not everything, to do with how much it cost to produce. It's like when my dad complains that the gas station raised their prices but still has the same gas in the tanks that they had yesterday. Likewise, the fact that a Playstation costs, say, $35 to produce has little to do with how much they sell it for.
And I agree with everyone else -- The Royals have obviously misread the market.
Looks it up. Apparently they cost $381 to make and that doesn't include shipping and all the other various costs besides the parts.
No idea. I just pulled that example out of thin air. Probably. Let's change the example to clothes, then.
My greater point still stands, dammmit! Stop pestering me with facts!
I think this crowd is way overestimating how many people are not going because of that $5. For a lot of us fanatics, being able to get out of work and run down to the park and get a cheap seat may seems like a great way to spend any old evening. For a lot of the more casual fans, its an event. A fully planned Saturday night, where they can also collect a bobblehead or watch fireworks, or some other form of entertainment to help get them through 3 hours of baseball.
They're in for that extra $20 for a family of four, because this is their night at the park, and they're not thinking "we'll I can always just go next Wednesday against the Padres for half the price".
Looks it up. Apparently they cost $381 to make and that doesn't include shipping and all the other various costs besides the parts.
What?!?! Are they having them hand-made by 90 y.o. Swiss watch-makers on top of an Alp? Are they using gold wiring?
Is there, uhhhh, should we have bid this out? They swore they were the only ones with the know-how. It's right there in the slide deck.
It is an outrage when Jolly Old St. Nick is subject to market forces when he has to pay for goods and services.
Market forces should only be at play when he (and he alone) spots a unique business opportunity and is able to take advantage of it to make a quick buck. He's been fortunate enough to do that several times throughout his life as his humblebrags here can attest.
Market forces should only be at play when he (and he alone) spots a unique business opportunity and is able to take advantage of it to make a quick buck. He's been fortunate enough to do that several times throughout his life as his humblebrags here can attest.
Yes, it does seem quite ironic.
But, I'm sure Jolly always prices his posters at a fixed 25% markup to what he buys them for.
Not necessarily. The demand for Royals tickets might be so inelastic to price that they'll only sell 50-60% regardless. I really think that people here are overestimating the effect that price of the ticket, especially compared to other factors, has on many buyers.
You may be right, I'm not sure there is a way to measure this specifically, I can only speak from my own experience. And while I don't live in or near KC, I can attest that my own decision to attend or not attend in my own market is heavily dependent on the deal I can get for any particular game.
That's funny, I just logged in to state that my eyes roll involuntarily whenever I see YR's dumb little rants, but damned if #51 doesn't make a little sense.
Other than to charge $10 for the prime games or $50 for a cold, wet April night against the Astros, right, its not going to be measured. And I'm in the same boat, price is a key factor. But like I said in 43, I (and I think you) are concerned with maximizing the amount of time in the stadium over the course of the year for our buck, but from discussion with family, friends, coworkers, and non-diehards, that's not true for many people.
And I think it can't be ignored that many customers don't make ideal decisions for themselves, and I can't blame any good capitalist for taking advantage of that. I know in Cleveland that people will pay $10+/ticket more to go to a game where hot dogs are $2 a piece cheaper.
He completely ignores any idea of elasticity in his latest effort to hammer his square peg into any odd shaped hole he can find.
And of course, the blatant hypocrisy of wanting a free market, until the smaller market teams can benefit from it. It's fair to him for the Yankees to extract every last dollar from their market, and not let anyone else have a shot at it, but when smaller markets are trying to extract every last dollar from their market, it's "gouging".
Funny, I'm pretty much the opposite. The length of game and time/hassle of getting to the game is a much bigger barrier than the cost.
I'd be happy to spend $35 on a ticket to a 2:30 game, that I could get back and forth to in 30 mins. each way. I don't really want to go a 3:30 game that takes an hour plus in commute each way, even if it costs $5.
Well let's see if I can defend myself against you.
I'll point out that you're stretching the truth, how's that?
Well the Yankees aren't relying on the more popular, successful teams to prop up their franchise. The Yankees can pay their own way. It isn't unusual to ask that those free-riding on the wagon adhere to rules unnecessary to those who are doing all the pulling. If I can buy a bottle of fine brandy with my fairly-earned salary while you're precluded from using your EBT card for a jug of Ol Rotgut that's just the price you have to agree to pay. Dependency should consequences, even for fabulously wealthy billionaires who made their fortunes exploiting foreign sweatshop workers and depressing local economies.
And nine hotdogs later, who's laughing now.
Unless of course, that dependency is needing to have blocked off the biggest, wealthiest market from 97% of your competition.
Touche, but after eating 9 dollar dogs, I'd bet you're curled over a toilet, and certainly not laughing. Those things are seriously disgusting, and yet people will wait in line for two innings for them.
So unblock it. Go ahead. End all territorial rights, it isn't like the Yankees invented them. Teach the Yankees a lesson! Call Bud right now! Demand satisfaction!
Is there even one of your heroic welfare mooches on the record and wanting to repeal territorial rights, which have existed in baseball since before your grandpappy was born?
Yeah, yeah, we've heard this empty threat time and time again. Like I said, this is just the imposter who can do nothing but repeat the nonsensical rants without defense.
Generally speaking, it does seem like companies ought to account for this irritation potentially creating a general drag on the brand. They want to play many iterated games with their consumers, which means they ought to avoid making people feel like they're being gouged. Because they can always just stop playing with you.
Yes, because they suck and they're exploitative. I avoid them like the plague.
Book publishers used price discrimination long before most other goods and services.
From wikipedia:
ETA: And the hardcover book comes out first, for people who do not want to wait a year for the paperback
[1] If Sugar Bear wants to find a real symbol of our national decline, dynamic pricing would be a good place to start
This is an interesting point, but probably more effect than cause of income inequality. Companies profit more when they can tailor their prices to each person's willingness to pay (eg 30 different ticket prices for every ballgame based on seat location, and 5 different classes of games based on weather, day of week and opponent) rather than mass pricing (eg 8 different prices - box and reserve seats for each of 4 stadium tiers).
That's why you buy a bunch at a time. They may not be good, but there's ten of 'em.
And in fact it's more complicated than hardcover vs. paperback (which are, as your quote shows, at least different quality objects). A publisher will figure on selling a certain number of hardcovers at a certain number of price points: "bestseller" discount, full price, Amazon vs. publisher direct vs. brick-and-mortar, backlist discount, sale price, remainder, pulp. The same exact object will sell at numerous prices, and the list price is a balance that is estimated to produce a given profit.
I would be if it cost the restaurant no more to put a steak on my plate than a bowl of pasta.
Book publishers used price discrimination long before most other goods and services.
True, though much of that price discrimination is due to the discrepancy in author advances and the differing anticipation in the number of sales.
And unlike baseball ticket prices, hardback books are cheaper when adjusted for inflation than they've ever been in my long lifetime. William Shirer's bestseller The Rise and Fall of the Third Reich came out in 1960 with a $10.00 list price and virtually no discount stores anywhere. In 2014 dollars that would come to $80.37. You can buy a brand new copy of the hardback of that book today on Amazon for $25.11, and that example is hardly unique.
From wikipedia:
ETA: And the hardcover book comes out first, for people who do not want to wait a year for the paperback.
Others can simply wait for the paperback to come out, and then buy the hardback edition for what by that point is usually a much cheaper price. I've lost count of the number of clean hardback books in VG or better dust jackets that I've bought off Amazon over the past 8 years for $0.01 + postage.
[1] If Sugar Bear wants to find a real symbol of our national decline, dynamic pricing would be a good place to start
This is an interesting point, but probably more effect than cause of income inequality. Companies profit more when they can tailor their prices to each person's willingness to pay (eg 30 different ticket prices for every ballgame based on seat location, and 5 different classes of games based on weather, day of week and opponent) rather than mass pricing (eg 8 different prices - box and reserve seats for each of 4 stadium tiers).
Don't get me wrong. A five year old can understand the logic behind dynamic pricing for mass entertainment. That doesn't mean I have to like it. Unlike my feelings towards book publishers, I have little or no sense of identification with baseball club owners' desires to squeeze the last penny out of the average fan. OTOH since Extra Innings provides a supremely affordable alternative, I don't really get too worked up about if some chump with money to burn wants to pay $150 for the same seat that cost $1.50 not that many decades ago.
Maybe that's a cynical attitude for me to take, but again: lifelong Royals fan. Obviously, winning baseball games has not been the foundation of the relationship.
Yes, you'll never stop of your own volition. That's the moral hazard you've whined your way into.
Yes, because they suck and they're exploitative. I avoid them like the plague.
Agreed. Never ever (ever!) go to a good restaurant serving prix fixe meals on a major holiday. No top chef works those holidays and the food is prepared assembly-line style.
Because money.
If it's a genuinely good restaurant they'll probably do a good job. They may revert to assembly lining in the kitchen, but that's often the only practical way to handle the number of covers that you get on days like this. Assembly line doesn't doom the quality of the food - some delicious dishes are naturally suited to assembly lining. At a small restaurant it might give them a chance to do something that they don't normally have the volume for, like prime rib, or suckling pig, or chocolate souffles.
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