If you book a lot of flights, you know the oddities of airline pricing — where a round trip can be one price on one day, and then either half or double that price the next. Such is the world of dynamic pricing, where high-volume sellers work to charge what the market will bear while also seeking to clear their inventory.
While vexing and confusing to travelers, dynamic pricing makes airline travel possible (although still not profitable). If you REALLY need to be in Phoenix on a certain day or time, you’ll be willing to pay a higher price to get there. If you eventually want to get to Phoenix, or thereabouts, the value you’re willing to pay will be lower. If, suddenly, EVERYBODY wants to be in Phoenix the on the same day, the value of that flight is a sudden opportunity for revenue.
Arts organizations have played with variable pricing for a long, long time — scaling the house to put cheap seats in the balcony and megabucks ticket up front, discounting certain audiences at certain times, even pricing different genres on different scales. But these variations have tended not to be dynamic over time, both because it’s hard to change prices dynamically and keep your sanity, and because the culture of cultural ticketing was against it.
Now, the San Francisco Giants are diving into variable pricing (previewed back in December, and updated in yesterday’s New York Times). The ticketing system (provided by Qcue) can analyze price-influencing variables like expected weather, featured players, purchase activity, and time until the event to adjust pricing every minute, or hour, or day. So, when you’re sitting in the stadium, just like when you’re sitting on a plane, you may have paid a fraction of what the person sitting next to you paid — or you may have paid double, triple, or more.
There are all sorts of possible side effects for dynamic pricing — among them, the perception of scarcity. If your audience knows you will never sell out a venue, they may just wait until the very last minute to get their cheap seat. Plus, confusion and complaints will likely rise, chewing away at staff time and energy.
But if you can get even a small amount for a seat that would otherwise go empty, or if you can capture even a fraction of someone’s increased willingness to pay, such increments may be the difference between profit and loss. Something to watch, to be sure.