Revenue / 03.26.19
Price Me Right
What ticketing professional wouldn’t want a behind-the-scenes peek at how a worldwide entertainment giant substantially boosted revenues for its shows and attractions? That’s exactly what some fortunate attendees got when they took in the Price Me Right education workshop presentation at the 40th Annual INTIX Conference & Exhibition in Dallas. For those who missed it, come on down!
No, it’s not the popular game show in which contestants spin a giant wheel and predict the price of prize packages, but it isn’t far off. These days, the ticketing industry is engaged in a bit of behind-the-scenes showmanship of its own — making educated predictions about what to charge customers to get into various live events.
The gurus at Caesars Entertainment are doing this very well by employing various pricing strategies across their properties to maximize revenues. Caesars is the largest company in the world of its kind, with 81 (soon to be almost 90) ticket offices from Las Vegas to Dubai. It goes without saying that with a stable of headline artists that currently includes Celine Dion, the Backstreet Boys and Rod Stewart, they sell one heck of a lot of tickets every year. And, when they do it right, there’s a huge payoff.
“We’ve seen a 19 percent incremental revenue increase across the enterprise,” says Daniel Chang, Director of National Ticketing for the Las Vegas-based powerhouse. “Pricing is science meets art. It’s the science of looking at the data, analyzing the data, but the art of knowing your market, knowing your venue, knowing the demographics of your audience and trusting your instincts.”
It wasn’t that long ago when pricing decisions were a simple matter of doing what Amy Graca, Caesar’s Vice President of National Ticketing, calls “napkin math.” As she fondly reminisced at INTIX 2019, “Ticketing used to be simple. We would meet for lunch, talk about the upcoming show, write it down on a napkin and go back and build what the building wanted. That is long gone.”
Today, everything has changed. New technology is enabling venues, promoters and artists to be far more creative in setting prices using dynamic pricing, which is done by collecting and analyzing an ever-growing amount of data on ticket buyers and the market. Ticket sellers are using these sophisticated tools to evaluate the market size, demographics, competition opportunity and more.
Selling cycles are different too. “The standard model includes presales, like the artist and fan club presales, then the on-sale. There’s a normal bell curve with a huge spike in the beginning, then it levels off and there’s some pick up before the show,” says Graca.
Then, Graca continues, there’s the slow model. “We’re no longer starting ticket prices at $59, $79 or $99 and waiting to see what happens — and then going to StubHub to see $229, $249 and $279. We’re starting those prices in the primary market now. What happens as an effect of that is it’s a slower on-sale. There may not be a huge spike in the beginning that you’re used to seeing, that normal bell curve…everybody has to be comfortable and be okay with the fact that the bell curve isn’t going to be such a big increase in the beginning.”
Festivals and attractions with general admission shows and walk-up rely on open distribution as part of their selling model. This has changed things, says Graca.
“It used to be primary versus secondary — and secondary wasn’t even a topic of conversation. Now, it’s open distribution, which is effectively the secondary market, but how does that effect your pricing strategy? Again, trying to capture more of that upside up front rather than starting with those ticket prices lower and then reacting. We want to be proactive and start a little bit higher to be more in line with what’s happening in the secondary market. How do we get to that? That goes back to the data.”
That data, says Graca, shows Caesars what is happening in the secondary market in terms of the average ticket price per price level. This makes it possible for her team to leverage that data if the same artist comes back or if a similar artist is booked. They’ll understand what was sold in primary, with discounts, in Platinum Tickets and via some of the secondary market channels.
Using Ticketmaster’s Pricemaster tool during a presale, Caesars is now increasing ticket prices before the presale starts to capture more of the revenue that could go to the secondary market. Prices are then increased during the on-sale to be a bit more in line with what is happening on the secondary market and capture more of that revenue up front.
Shortly after Britney Spears started her residency at the Zappos Theater, Caesars implemented Ticketmaster's Platinum Tickets program, which adjusts prices according to supply and demand, similar to how airline tickets and hotel rooms are sold. The goal is to give the most passionate fans fair and safe access to the best tickets while enabling organizations to set prices closer to their true market value. Next, Caesars is planning to renovate its beloved Colosseum venue to provide improved VIP experiences and leverage the sales successes from its Zappos Theater.
When Graca turned the floor over to Chang, he took the audience through four pricing strategies: base scaling, variable pricing, dynamic pricing and premium pricing.
“Variable pricing is the ability to set prices differently based on a variety of factors. That could be time of day or night, customer location, day of week, level of demand, competitive pricing or even the method and stage of purchase — but they are static, and the price doesn’t change,” explains Chang. “The future is actually the flexible ticket. Being able to price those tickets off a variety of factors that are actually happening.”
There are several platforms you can use for dynamic pricing which give you the data to determine that pricing, says Chang. Caesars uses Pricemaster and Platinum Tickets, both from Ticketmaster. Others include Digonex, Dynamic Pricing Partners and Qcue, among others.
In 2018, Caesars sold 200,000 tickets that were dynamically priced through Pricemaster. Within those ticket sales, there were over 3,000 price changes — and not always an increase. Decreasing prices, says Chang, helps move tickets too.
Looking at the Platinum model, Caesars moved 40,000 tickets in 2018, including both seats and VIP general admission tickets.
Of course, entertainment organizations can employ all the pricing strategies they want, but without driving customers to a point of purchase, Chang warns, it’s all for naught.
“We’ve got the pricing there, we’ve got the strategies in place, how do we get the customers to buy the tickets? How do we get them to the content? With Ticketmaster, we use splash pages with a web address that’s very easy to remember. When you get on this page as a customer, you’re presented with a variety of options,” stresses Chang. “Not only can I buy the tickets, but I can also add a meet-and-greet to my purchase. I can do a front-and-center table…or the Platinum Tickets. There’s a lot of opportunity.”
Platinum Tickets and Pricemaster play different roles in the dynamic pricing process. To capture as much revenue for a venue’s very best tickets, which could be 2 percent, 3 percent, even 10 percent of its seats, organizations like Caesars will use Platinum Tickets. It’s more of a manual process to price those tickets, explains Rick Johnson, General Manager of Pricemaster.
“Platinum allows you to get really granular and price seats in pairs and fours so you can capture all the value,” he says. “You probably wouldn’t want or need to do that for all 4,000 (or 19,000) seats in a venue…It’s also hard to figure out what these prices are. How much of a premium can we really charge for those very best seats? If we’re saying that the four seats that are in the front row of the middle of a concert are worth something different than all the other seats in the whole building, then we don’t have a lot of data to help us figure out what those are worth. We haven’t sold them yet, we don’t really know how much extra someone will pay for those seats. That’s why the Platinum tool doesn’t have price recommendations in it today and why the process for pricing those is really the people who manage Platinum inventory, who have heavy experience in doing that…and they do a lot of trial and error. They won’t put the whole batch of Platinum out at the on-sale. They’ll put some of it out, they’ll see how it sells. If it goes quickly, they’ll raise the price for the next batch…They’re looking at the secondary market to get cues, but it’s a different process trying to figure out what these seats are worth. For the remaining 90–98 percent of the tickets, organizations use Pricemaster.”
There is a lot more data to price these tickets and come up with price recommendations, adds Johnson.
For Caesars Entertainment, it’s not only about selling tickets for live events but also for attractions such as its High Roller, the largest observation wheel in the world, and the FLY LINQ, a 12-story zipline on the Las Vegas Strip that opened in November 2018.
“The High Roller is something we’ve found we can upsell. We upsell the entire cabin, we put a bar in those pods,” says Graca. “Get creative, you can always find a way to make a better experience for the customer.”
While technology plays a lesser role in pricing decisions for attractions than for live events, other factors relating to variable pricing come into play, including time of day or night, time of year, day of the week and whether it’s a holiday.
Yet no matter what the event or attraction, these days flexible pricing is the name of the game. Still, despite the rapid pace of change in the industry, Graca says one thing remains the same.
“I believe very strongly that the ticket office should have a say in all of this because typically they know their venue. A lot of us here have worked in these buildings for many, many years. You may have the same artist come back multiple times. You know probably better than anyone what is going to happen…you have the best intuitive input [when it comes to deciding what price to charge your audience].”
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Tags: Ticketmaster , Reselling , StubHub , Secondary Ticketing , Venues , INTIX 2019