Revenue / 01.28.20
How Is Face Value Defined in Today’s Dynamic Pricing World?
Dynamic ticket pricing — setting game, concert, and other event seat prices based on real-time market demand and other data — has been around for years. But, with such factors as technology and shifting consumer patterns, it’s becoming more of an art and a science than ever before. Dynamically priced tickets can change by the hour, the day or the week, and prices can go up or down. There are certainly strategies to make money either way.
Russ D’Souza is COO and Co-Founder of SeatGeek, a leading mobile-focused ticketing platform. “In my view, dynamic pricing is any effort to change the price of a ticket based on specific criteria,” he says. “These criteria doesn’t need to be related to demand. For example, if both tickets next to a seat are sold, you could dynamically lower the price of the single ticket since it’s harder to sell. On the other hand, if your team makes a major trade, or is on a long winning streak, you may quickly want to raise the prices of your tickets for the next game to capture that additional demand.”
Pricing is a business strategy, with the goal being to find the right price at any point in the sales cycle. In the past, it was an afterthought. Those days are long gone. Alan Moffat, Ticket Operations and Customer Relations Manager for The Corporation of Massey Hall and Roy Thomson Hall in Toronto, says, “In the past, ticket prices were set when an event went on sale and would never change. In today’s ticketing industry, many organizations monitor ticket prices against a variety of metrics and will raise or lower prices based on demand [and other factors].”
This, of course, begs the question: How is face value defined in today’s dynamic pricing world? This was once a simple question. “But now the answer may vary depending on who you speak to,” Moffat says. “In my eyes, the face value of a ticket is simply the listed price when you purchase the ticket from the primary ticket seller.”
D’Souza concurs, adding, “To many in the industry, face value feels like an old-fashioned term because of dynamic pricing. While some tickets still do have a dollar amount printed on them, that specific ticket could sell for several different prices depending on how it was sold. It might be higher or lower depending on if it was sold as a single-game ticket or as part of a season-ticket package. In a world where dynamic pricing is becoming more prevalent and sophisticated, focusing on the face value of a ticket is almost always a fruitless effort.”
Pricing has become a major discussion point in the music industry. According to the latest Pollstar data, nine of the 10 highest-grossing concert tours in 2019 had average ticket prices above $100. Over the past decade, the average ticket price for the top 100 North American tours has soared 55% to $94.83. The run-up comes as artists are relying more on live performances and touring for income, promoters have gotten smarter about pricing, and as ticketing companies are deploying new technology to squeeze out scalpers and make more money the first time a ticket is purchased.
Among other things, artists are now more willing to sell their best seats for what the market will bear, something many avoided in the past for fear of being perceived as taking advantage of their fans. Promoters, meanwhile, have been collecting more on VIP packages like meet-and-greets and merchandise that get tacked onto tickets. Live Nation has started charging more for aisle seats at some shows, dubbing them “premium aisle seats” and collecting as much as $30 more a seat.
Some in the industry have expressed concern that people have grown frustrated, even weary with today’s ticket pricing. But both industry professionals interviewed for this article don’t think that’s necessarily the case.
“From a fan perspective, I don’t think so,” D’Souza says. “If anything, pricing makes more sense now than ever before. I also think there is this misconception that dynamic pricing means higher ticket prices, but it often has the opposite effect. If an event is not selling well, you might see prices move down. And for the ticket office operator, dynamic pricing is a huge opportunity to both increase revenue and improve the customer experience. This is why we are always highlighting our world-class, rules-based engine. The more ways you can adjust the price of a ticket in real time, the closer to the market price that ticket will sell for.”
Currently President of the Ontario Professional Ticketing Association (or OPTA), Moffat has been in the ticketing industry for 20 years, having started out working at a Ticketmaster outlet at a Tower Records in 1999. His two decades of experience have taught him to advise INTIX member-readers to pay perhaps more attention to the other aspects of ticket sales and let pricing work itself out.
“While there certainly can be frustration due to ticket pricing, I think more often it is caused by high demand,” he says. “Most ticket buyers are concerned with a having a fair chance to buy tickets when they go on sale. We see more frustration from customers when they have a hard time purchasing tickets, either due to technical issues or due to long wait times, than we do from ticket pricing.”
Being in Canada, Moffat was asked if the Ontario Ticket Sales Act had made any impact. Passed in December 2017, the legislation outlines specifications for how tickets are sold, distributed and monitored. “To this point, the impact of the Ticket Sales Act on ticket pricing has been fairly minimal. Much of the act is focused on legislating the secondary ticketing market in Ontario. There are some potential amendments regarding the disclosure of ticket inventory, which may have more of an impact in how tickets are sold on the primary market. We will have to wait see if these amendments are made to the act and if these changes will affect primary ticket sales.”
With regards to pricing — dynamic and otherwise — Moffat summed it up best. “Ticket buyers want to feel they got the best deal possible. People are becoming savvier when buying tickets. They are very aware of other ticket-buying options such as the secondary ticket market, as well as sites like Groupon. I believe there is now more pressure than ever when setting prices as there are so many other factors to take into consideration.”
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Tags: Reselling , Secondary Ticketing , Consumer Behavior , Leadership