Dynamically flawed ticket pricing for Leeds TSS July 5, 2013 Leeds United 55 Comments Leeds United today announced plans to introduce a ‘dynamic ticket pricing’ scheme at Elland Road. On face value, the system is simple enough. It’s basic supply and demand. Tickets are set at a base value determined by the attractiveness of the match and if demand is high, they gradually increase. When demand is low, prices don’t change. But therein lies the problem. Like Derby County and those who’ve gone before us, Leeds United will reward fans who buy early with the cheapest tickets available for each match. Less attractive games like Yeovil Town will start at £20 per ticket, potentially even less. Fans recognise good value for money and 6,000 sell. The next day, ticket prices have increased to £22 per ticket and another 4,000 sell. A couple of days later, Leeds United have sold 15,000 tickets for the clash and prices have increased due to demand. They now cost £30 each but have stopped selling. Leeds United v Yeovil Town is set to be played in front of a crowd of 30,000 (factoring in season ticket holders), which may be a good attendance for such an unattractive fixture, but it still leaves 10,000 empty seats Leeds United can’t sell. There’s weeks left until the fixture and no one is buying tickets any more, they don’t want to pay £30 to watch Leeds play Yeovil. At this point, the dynamic ticket pricing model should mean prices are reduced, but they can’t go any lower than the £20 they started off at because the club has told fans that booking early guarantees them the best price. In fact, the club can’t reduce prices at all because it’ll upset those who booked while prices were rising. They didn’t book on the day of release, but they still booked early. So this leaves Elland Road with 10,000 empty seats and the club’s hands tied. Leeds United’s own ticketing system and guarantees they offered fans booking early prohibits them from offering incentives to casual fans who may have been enticed by a last minute offer and decided to come to the match. Had Leeds United been able to offer the remaining tickets for £15 on the Friday or in some kind of Groupon offer (which proved successful for Derby County) then there’s every chance they’d have sold a lot of the empty seats. Dynamic ticket pricing is therefore flawed. It’ll work perfectly well for matches that are expected to sell-out, but that’s rarely the case at Elland Road. The trouble Leeds United have is that they can’t shift those 10-15,000 empty seats our club plays in front of every week. Making prices more expensive when there’s only 10-15,000 seats remaining doesn’t solve that. If fans weren’t tempted to book at the base level, increasing the prices won’t make them change their minds. I’ve worked in retail all my life. I’m a nationwide manager for one of the biggest retailers in the UK, and pricing based on demand is fundamental to the business. We don’t increase prices above RRP when stock is selling well, but if we can’t shift a certain product, you better believe it’s going to have an enormous 50% off sticker attached to it when the sales roll round. As for all the stock that was selling well? There’ll be no sales stickers attached to that, I assure you. But nor will we increase the prices. We don’t have a ‘50% price hike day’ for items that are selling well because customers won’t come flooding through the doors for such an event. They’ll stop buying our product completely. One strategy we use nowadays when struggling to shift stock is to sell it off wholesale at a dramatically discounted price. This serves numerous purposes to us, but the only one relevant to Leeds United is that the stock sells. 10,000 tickets remaining on the Wednesday before a match? Let a company like Groupon sell them for you. You might not make any huge gains, but you won’t lose money either. Selling at cost still puts the item into the hands of consumers making them more familiar with the brand you’re selling. Allowing market conditions to determine price makes absolute sense. But it only works if prices can go in both directions. Promising those who book early the cheapest tickets goes against the basic principles of market-driven pricing. When something isn’t selling, the price must come down. It does leave you vulnerable to people not buying a product because they’re waiting for a better price, but only in the same way retailers across the world have customers waiting for the sales. If the product is something customers want and they consider the pricing to be reasonable, they’ll buy it. If it’s something they’d only be interested in at a lesser price, then your product isn’t worth what you’re trying to charge for it. What this really comes down to is increasing gate receipts. It gives Leeds United a flexibility to capitalise on the increased demand success creates that a fixed pricing system doesn’t allow for. Dynamic ticket pricing may not have an effect on attendances (indeed, Derby County’s were down 3,000 last season after an initial rise), because attendances usually have more to do with success than anything else. But if Derby County and Leeds United are going to sell X amount of tickets irrespective of pricing, then dynamic ticket pricing may actually increase profits (which is no bad thing to any business). The base price for tickets doesn’t really change if you book early enough, but when a club is doing well and fans are desperate to see their favourite team, prices shoot upwards the quicker tickets sell, netting the club more cash. For season ticket holders like myself, none of this makes any real difference. For those of you who book match-by-match, a successful season for Leeds United could see your ticket prices soar. Especially if you tend to book late. And as for the 10-15,000 empty seats at Elland Road? Dynamic ticket pricing won’t do anything to change that. Groupon offers, last minute discounts and special offers work well, but gradually increasing prices based on demand won’t create any sudden surge in sales. The only thing that’ll really get 40,000 people back at Elland Road week in, week out is success. That seems to be what Leeds United are counting on.