VBS: Lesson 1TICKET 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.

KEY TERMS• PRICE• REVENUE• DEMAND• YIELD MANAGEMENT PRICING• Dynamic Pricing• Marginal Cost• Ticket Brokers• Ticket Agencies

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.

REVENUE - money collected in sales.

Revenue (# of unit sales) x (price of each unit)

VBS a number of revenue sources (streams);• Tickets• Concessions• Licensing• Sponsorships

Real Life - TV / Radio Broadcast

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 fixedExample:

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

Marginal Cost – cost of producing one additional good or making one more commodity available.

• 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”.

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” rows

• 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

How do fans purchase their tickets: Team Box Office – safest most affordable means of

buying a tickets.

Ticket Brokers – individuals or companies who purchase tickets and then sell them for a profit.

Artificial demand which drives the price up.

Ticket Agencies – Companies stadium owners use to manage their ticket sales.

VBS – Lesson 2Assignment

Ticket Pricing