Dynamic pricing comes to Major League Baseball

Thursday, May 21, 2009 3:52 PM

I think Andy's got it right. Even if the park sees no revenue increase, they win because they smooth out diurnal/seasonal variations in attendance.

Think of it like an engine. A hybrd gas/electric car gets its efficiency wins in part because more of the gas engine's time is spent in the efficient RPM range---when it needs more power, it is augmented by the electric motor. When it needs less power, the gas engine can often be cut entirely, and the car run on pure electric. Theme parks also have "efficient" attendance levels---too few, and you've got wasted capacity; too many, and guest experience suffers.

It would be interesting to know what the economic theory says about fine vs. coarse pricing. That's beyond my cocktail-party-level understanding.


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Thursday, May 21, 2009 6:08 PM
LostKause's avatar

Turn the frown up-side-down, Gonch. :) I really do understand. I was just trying way to hard to come up with reasons and examples of why I don't like the idea. Weather and attendance was mentioned prior to my chimeing-ins. I'll stop...

Without goofy examples and made up situations, I'll just say that I don't like it at all. I don't like the idea of a business trying to condition their customers to accepting something that may benefit the park more than it benefits the customers. A business has the upper hand when trying to implement something like this. They have all of the data and they have the ability to keep the formula of how they come up with a price a secret. What's to stop them from abus-ahem- misusing the information that they have in order to keep the prices as high as possible?


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Thursday, May 21, 2009 7:36 PM
Carrie M.'s avatar

In a word? Customers. The very folks you are worried about protecting have the power to keep the business in check in terms of pricing. That's how all of these concepts work.

If the customers decide the price is too high for their interest, then they don't pay it. The business then must lower the price or go out of business.


"If passion drives you, let reason hold the reins." --- Benjamin Franklin

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Thursday, May 21, 2009 9:28 PM
Lord Gonchar's avatar

And that's exactly the point I think is missed on all of these discussion - if people didn't like it (or at least tolerate it, I suppose) - it wouldn't exist.

VQ systems, $4 drinks, $15 parking, big record breaking rides, vast expanses of concrete midway, free drinks, free parking, tree lined gravel paths, recreations of classic coasters that take years to get right - it all wouldn't exist if the customer didn't support it.

No one is a victim to the whims of big business here. No one is out to get you. Enough people support all of the above things for them to exist. It's not like the amusement parks are going door-to-door and forcing people onto buses that deliver them to their mandatory park visits.

Although, come to think of it, that was kind of the concept in the original Mr. Six commercials. ;)

(seriously, think about it :) )


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Thursday, May 21, 2009 9:36 PM
Jeff's avatar

That's a silly statement, to suggest that things people don't like wouldn't exist. No one likes paying three bucks for a soda, not even you. You may say, "Whatever, I'm on vacation," but I think claiming that you like it is a real stretch.


Jeff - Editor - CoasterBuzz.com - My Blog - Silly Nonsense

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Thursday, May 21, 2009 10:16 PM

The parks aren't going to use this to spring a big "Gotcha" on people. This isn't going to be spinning a wheel or throwing darts to figure out what price to charge that day. It's going to be based on behavior already shown by customers that up till now nobody has thought to document and examine for patterns.

Using Hershey as the example, if they announce a gate price of $51.95, could they realistically decide to raise the price to $65 just because they can? Or because 50,000 people showed up that day? So they may get an extra $14 they might get from a few people who didn't care what the price was. But does that offset all the bad publicity they would get? Not to mention complaints to the BBB, consumer protection agency, and probably the state attorney general.

I could see this as increasing attendance for parks. Certainly they have a lot of unused capacity many days. Not everyone who decides to show up on discount Tuesdays will be overflow from crowded Saturday. Maybe some people who thought that $50 is too steep might be convinced to come for $30 or $35. I think the discounts would have to be that steep to work. It can't be the typical $5-6 dollars off you can get with the coupons you pick up at Wendy's or BK.

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Thursday, May 21, 2009 10:26 PM
Lord Gonchar's avatar

Jeff said:
That's a silly statement, to suggest that things people don't like wouldn't exist. No one likes paying three bucks for a soda, not even you. You may say, "Whatever, I'm on vacation," but I think claiming that you like it is a real stretch.

Oh, come on, Jeff - you know what I mean. Besides, I never said people liked $4 drinks. I used 'like' 'tolerate' and 'support' to describe all the things on that list.

If enough people didn't pay $4 for drinks, there wouldn't be $4 drinks at amusement parks. It's no more complicated than that.


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Thursday, May 21, 2009 10:33 PM
Carrie M.'s avatar

Man, I gotta start typing faster... ;)


I think that's why Gonch added, "or at least tolerate it, I suppose." The point is that the park is charging three buckets for a pop because enough people are paying it. Until a large enough number of folks decide they won't tolerate it, there's no need to change. The same would be true for the higher end gate price.

Last edited by Carrie M., Thursday, May 21, 2009 10:34 PM

"If passion drives you, let reason hold the reins." --- Benjamin Franklin

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Friday, May 22, 2009 8:23 AM

I don't like the idea of a business trying to condition their customers to accepting something that may benefit the park more than it benefits the customers.

If done right, it would benefit everyone---operator and customer alike. Those who need a bargain would be better able to find it. Those with less flexibility in when they can visit would have fewer other people to contend with---in exchange for paying more, of course.

So, whether you are time-limited or money-limited, this works.


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Friday, May 22, 2009 9:20 AM

OK, I am actually seeing this from the business side, as I am currently beta-testing software in my bowling center business that allows us to use "Dynamic Pricing".

What it comes down to maximizing sales revenue. A customer "at some point", is willing to pay less to come during a normal "slow time", and more during a "peak time". An amusement park is somewhat different because their "fixed capacity" isn't nearly so "fixed" as my bowling center, so the effect is actually more dramatic for me, then it is an amusement park.

Here is how it affects me....if I can encourage people to use the lanes during normally slower times, but know I will use the lanes REGARDLESS at the peak times, then I generate additional revenue because my variable costs are minimal when lanes are used during slower times (opposed to the constant fixed costs). This allows my business to thrive, which in turn will allow me to have more capital to improve my business (either with physical improvements, or additional staff). In the long term, the customer and I BOTH win.

I am curious to see how the amusement park industry would handle the Dynamic Pricing "rules" to determine the cost structure. If I were them, I would offer some sort of discount ticket during a 'slow day', and then only sell those tickets online for the specific day. This would allow me to track the sales, and then properly staff based on the sales volume. I don't know if it would be possible to do based on the weather.

I wouldn't be surprised if you see the movie industry do this at some point as well.


Fever I really enjoy the Simpsons. It's just a shame that I am starting to LOOK like Homer.
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Friday, May 22, 2009 11:36 AM
LostKause's avatar

The movie business already does this to a degree. Before 6 p.m., I pay $6.25. After 6 p.m. I pay $8.

We are talking about Dynamic pricing as if we know the amusement park business will definitely implement it. I don't see it as inevitable.

Lower prices during the slow season will cause longer lines. I still don't like it.


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Friday, May 22, 2009 1:32 PM

But longer compared to what? It's not like the slow season will suddenly turn into the first weekend in August. If a few hundred people more show up, what will the parks do? For starters, put the second train on the track. Most parks run at reduced capacity and efficiency on slow days, but staffing isn't reduced by all that much.

For example, if you have 40,000 people in the park one day, but only 10,000 the next, you can't have 1 person working a coaster instead of 4 because you have 1/4 the guests. Maybe you don't need as many people in the parking lot, and you can cut back on some people in food service, gifts and games. But every ride should be open, you still need ride maintenance, and the bathrooms still have to be cleaned. Most of the staff already has to be there, why not try to increase the number of customers?

If you go to a park on a slow day, the lines may be shorter, but it's also possible that attractions won't be operating, and food service might actually be slower. In the long run, putting more people in the park during slow times and reducing crowds on peak days both increase the efficiency of the park and enhance the experience of the guests.

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Friday, May 22, 2009 3:42 PM
kpjb's avatar

LostKause said:
Lower prices during the slow season will cause longer lines. I still don't like it.

Well, just get a Q-bot with the money you save! :)


Hi

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Friday, May 22, 2009 4:17 PM
rollergator's avatar

QCue hits the mainstream media (be patient, MSNBC ad-loads): http://www.msnbc.msn.com/id/21134540/vp/30833464#30829988

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Friday, May 22, 2009 5:07 PM
Lord Gonchar's avatar

Wow. Awesome find, Gator. Funny how they touch on a few of the things brought up in this thread.

For the record, sales for the dynamically priced Giants tickets are up 20% vs those same seats last year.

Watch the last 50 second for the CEO's take on people paying what they feel a ticket is worth. Essentially, if you paid $100 for a ticket and later the guy buying the seat beside you paid $50, you shouldn't be pissed because it was obviously worth $100 to you or you wouldn't have purchased the ticket.

Definitely worth the 4 minutes of my time to watch.


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Saturday, May 23, 2009 9:34 PM
ApolloAndy's avatar

Do people on airplanes compare ticket prices to the people they're sitting next to?


Hobbes: "What's the point of attaching a number to everything you do?"
Calvin: "If your numbers go up, it means you're having more fun."

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Saturday, May 23, 2009 9:54 PM
Jeff's avatar

Totally. But it usually results in some people being pissed off. I've sat next to last-minute people who paid twice as much as me.


Jeff - Editor - CoasterBuzz.com - My Blog - Silly Nonsense

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Saturday, May 23, 2009 10:58 PM
Lord Gonchar's avatar

I'm always sitting next to one of my kids. I know how much they paid. :)


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Saturday, May 23, 2009 11:09 PM
Carrie M.'s avatar

I have never talked to the person I'm sitting next to on a plane about how much his/her ticket was versus mine. That doesn't even sound normal to me.

But I will admit, in fairness, that I usually keep my nose buried in a book so as to discourage any and all idle chitchat. :)


"If passion drives you, let reason hold the reins." --- Benjamin Franklin

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Saturday, May 23, 2009 11:55 PM

Airline tickets are more exclusive than park tickets. There's a limited number of seats available going from city A to city B on any day, so price isn't necessarily the most important factor. People are less concerned with saving a few dollars than they are making sure they can't get a seat on a flight for the day they want. If you need to get a certain flight for a certain day, you're not going to wait around till the last minute and hope the price will be $50 cheaper and risk that the flight is booked.

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