VBS: Lesson 2TICKET PRICING

Sports Marketing

Learning Target(s)•I will be able to determine and set the price level for my VBS tickets.

•I will be able to analyze demand to help set accurate/profitable ticket, vending and merchandising prices for my VBS franchise.

Definitions

• PRICE• REVENUE• DEMAND• YIELD MANAGEMENT PRICING

What is the main “product” of a sports franchise?

The seats or tickets they

offer for purchase.

PRICE - the amount of money you charge customers

for one unit (product) of what you are offering.

VBS – your price for your tickets should reflect what your fans are willing and able to pay.

DEMAND - the amount of goods/services that customers

want and are able to buy.

VBS – your ticket prices should be determined by the demand of the event and your potential customers (fan base) income levels.

Why is pricing so tricky?

• # of seats are fixed

Example:Stadium: capacity = 50,000 Tickets for sale must = 50,000

• there is no marginal cost to selling additional seats

Where are “seats” fixed?

What happens if pricing is set too HIGH? • Don’t sell as much

• Limits your target market

• Limits your other revenue streams•Stadium Parking•Stadium Vendors•Stadium Merchandise

Simply said, “You Lose Money”.

REVENUE - the funds (money) you collect for things you sell.

Unit Sales (x) Price of each Unit = Revenue

Example:500 Box Seats (x) $2.50 price per Box Seats = $1,250 is the Revenue

VBS sources (streams) of Revenue:• Ticket Sales• Concessions• Licensing• Sponsorships

What happens if pricing is set too LOW?

You will lose money – why?

•Supply and Demand is not balanced.

Seats should be priced based on “VALUE”.

•Value = what fans think its worth and what they feel they benefit from it.

Yield Management Pricing (YMP):

• Concept of setting different prices for seats of different value

Example - higher price for seats with better views

lower price for top six seats

• YMP is used whenever quantity of a product is fixed.

Example - Stadiums (PBS – 65,535) & (Hines Field – 64,450)

Arenas (Rupp Arena – 23,000) & (MSG – 19,500

Other examples where YMP is used:

• Sporting events

• Plays

• Concerts

• Hotels

• Airlines

VBS – Lesson 2Assignment

Ticket Pricing