Dynamic pricing hits a home run

As I write these words in the waning days of September, my favorite baseball team, the San Francisco Giants, are involved in an exciting battle to win the National League West Division and advance to the playoffs for the first time since 2003. A native San Franciscan and certified baseball junkie, I went online several weeks earlier to the official S.F. Giants Web site to buy a couple of tickets to the Giants’ season-ending series with the San Diego Padres at AT&T Park during a trip I had planned to the Bay Area the first week in October.

Tickets were available, but they seemed rather expensive, so I decided to think it over. I went back a few days later and the same tickets had gone up in price. Revenue management, the driving force of ticket prices in the airline industry for decades, has reached the big leagues.
Ticket prices to sporting events have always been stratified, generally depending on the seat’s location – the closer to the action, the more expensive the ticket. That still holds true for the Giants, but now, thanks to revenue management, dynamic pricing and the analytics behind it, location is just one of several factors that determine what I have to pay if I want to see the Giants play.

Data from the secondary ticket market (ticket agencies) combined with the status of the pennant race, the success of the Giants on the field, the opposing team (historic rivalries like the Dodgers, pennant contenders like the Padres, rarely seen inter-league teams like the Yankees), pitching match-ups, the day of the week, even the weather forecast all play a role in determining the cost of a Giants’ single-game ticket throughout the season. All of these variables are assigned a value and the numbers are crunched on a daily basis, providing the Giants with an optimum price for a given ticket to a given game on a given day, just like the airlines.

The Giants, the first Major League Baseball team to implement true dynamic ticket pricing, experimented with the system on a limited basis last year. Encouraged by the outcome, the Giants subjected all of their single-game tickets this season to dynamic pricing. The results? Ticket revenues for the 2010 season are up 6 percent for comparable attendance figures from last year.

For example, according to the San Francisco Chronicle, a ticket in the left-field upper-deck stands for the Oct. 1 night game between the San Diego Padres and the host Giants cost $5 at the start of this season and $5.75 on Aug. 1. Once the Giants and Padres became locked in a battle for the NL West title, the price shot up to $20. A ticket in the Field Club behind home plate for that game started the season at $68. It cost $92 on Aug. 1, $121 a week later, $145 on Sept. 4 and $175 shortly before the game.

Take me out to the ball game, but not at those prices.

Ticket agencies are always an option, and I’ve never been to a baseball game where I couldn’t walk up and buy a ticket 10 minutes before the first pitch from the friendly, neighborhood scalper right outside the ballpark, but in the end, I decided to pass on buying tickets and to watch the game on TV instead, for free.

— Peter Horner, editor