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Tue March 6, 2012
Baseball Teams Are Acting Like Airlines
Originally published on Tue March 6, 2012 7:17 am
Baseball teams are finally doing what airlines have been doing for decades: changing ticket prices on the fly, based on demand.
At ballparks around the country this year, ticket prices will fall when rain is in the forecast and rise when a superstar comes to town.
From an economic standpoint, the only question is why they didn't do it sooner. Why not sell seats on the cheap if they'd sit empty otherwise? Why not charge a premium for sellouts?
For a long time, changing prices according to changes in demand just felt wrong; it was what scalpers did.
StubHub changed that. The site — which has an official relationship with Major League Baseball — allows fans to resell tickets online. As a result, both teams and fans have gotten used to seeing prices rise and fall with demand. That's encouraged teams to start tweaking prices themselves.
"We work with half of baseball right now," said Barry Kahn, CEO of Qcue, a company that helps teams sell dynamically priced tickets. That's up from just four teams at the start of last season. In all, 17 of 30 Major League teams will use dynamic pricing this season, according to Ticket News
The basic variables are pretty straightforward, Kahn told me. What's the weather? Who's the opponent? What's the playoff picture?
The real secret sauce comes from figuring out how to price tickets for people who have already decided to come to the game. "There's much more movement within seating areas, within a game, then there is on the attend-don't-attend decision," Kahn said.
Sometimes that may mean charging even more than usual for the best seats. Other times, though, it may mean selling the good seats at a discount, because it's a bummer to have lots of empty, field-level seats.
"If you have a 20,000-seat venue and you're only going to sell 10,000 seats, you want everyone sitting downstairs," Kahn says.