Pricing Model Responds to Demands of Crowd

The current economic conditions have put a damper on attendance at games and matches throughout all sports. Baseball, especially, has had a tougher time than most getting fans into seats, with ticket sales down at least 5 percent. But the San Francisco Giants organization is fighting this trend with a slick pricing strategy that is used primarily in the sale of airline tickets and hotel rooms.

Feeling that the League’s mandate to use StubHub as the primary ticket dispensary was hurting sales, the Giants began experimenting with a dynamic pricing model. For each home game, the Giants offer about 2,000 seats whose prices shift based on demand. Unlike other teams who peg prices at the beginning of the season which rarely change, the Giants’ model weighs factors such as weather, opponent profile and past ticket sales in setting prices. So a Saturday game against the Dodgers where Tim Lincecum pitches will cost more than a Tuesday day game against the Nationals.

The model has been successful. The Giants say they are sell about 20 percent more tickets in the dynamic pricing zone—which is located in the upper deck and three bleacher sections—than they did a year ago. The team is also averaging about 375 more fans over the same period as last year, although attendance is below last year’s full-season average.

From the fan’s perspective, there are positives and drawbacks. The benefit is that a fan can come by a cheaper than face-value ticket if he doesn’t mind seeing a non-blockbuster match-up. But the system could hurt season ticket holders in the future if one is able to buy a seat via the new model at a price lower than what was paid by the season ticket holder. Season ticket holders buy their seats at set prices at the beginning of the season. In the future, will season ticket holders get refunds if dynamic pricing sets prices lower than face value? The organization should be wary of how dynamic pricing could effect loyal customers who purchase vast quantities of seats each year.

Other teams are watching the Giants’ experience closely. Indeed, the organization is a vanguard in applying this model to ticket sales. If successful, it’s likely that other baseball teams, and teams across all sports, will adopt dynamic pricing in their ticket sale operations.