Shouldn’t ticket pricing be more imaginative?
Posted by John Beech on April 7, 2009
Traditionally ticket pricing has been on the standard principle of ‘This is the price: you pays your money and you buys your ticket’. A fine principle in times of economic stability but one which doesn’t not work so well in times of recession.
As minds turn to next season, in many cases with enforced but unrealistic optimism, the annual price review is taking place. There are many examples of ticket prices being held or even reduced. At Stockport County, under severe pressure for a tax debt of £125k, they have come up with a special deal of a four-year season ticket in order to raise money quickly (1). Good luck to them, but it is a less than ideal approach in the long run – if it works too well, it will severely hit their cashflow over the next four years. What it does merit as an idea is that it demonstrates an imaginative approach to yield management, the process of manipulating your pricing with a view to maximising your revenues and hence your profit.
Other leisure sectors face the same problem as football clubs – once an empty seat has not been sat on (and paid for) it has no further value; in other words it has a very precise shelf life. Airlines such as Ryanair and easyJet, and to a lesser extent hotels, have adopted what was, at the time, a radical approach to pricing – previously tickets had gone on sale at a high level which reduced as the time of the flight approached. The new low-cost carriers turned this model upside down; they started at a low price and raised it as the departure came nearer. In order to milk the revenues, sophisticated software has been developed.
Now, I’m not suggesting that clubs rush out and buy the airline software. There are differences between the markets. In particular, there are many fans who habitually turn up on the day and buy a ticket, certainly in the lower leagues where there is always a seat available, whereas few tourists or business travellers would plan their journeys like this.
What I would suggest, however, is much more experimentation with pricing. To be fair, we do already see this with offers for particular games, but I believe that football clubs do not even come close to maximising yield (the revenues from tickets).
One obvious approach is to set a high price for purchase on the day and reduced but varying prices for before-the-day purchases on the internet. Internet ticketing came relatively late to football club websites, and today clubs run their sites from intermediated platforms with standard packages. Time for a reassessment of internet strategy I would suggest.
Yes, experimenting does take place, especially by the more business-like clubs, but what is needed is a widespread and systematic approach to yield management, especially among the lower league clubs, who are more susceptible to the pressures of the economic downturn.