Take Me Out to the Ball Game, But Not on the Weekends
Subject Variable Pricing to Increase Profitability
Topic Supply and Demand; Elasticity; Utility and Consumer Choice
Key Words Supply, Demand, Variable Pricing, Anticipated Demand
News Story

Over the last 9 years, average attendance at major-league baseball games has fallen from 31,000 to 26,600 a game. As a result, baseball teams are beginning to use variable pricing - charging different prices for the same seats at different times - in an attempt to increase revenues. Ticket prices will increase for high-demand games, such as on weekends, against marquee teams, or on special occasions, such as Opening Day. Baseball team executives are beginning to think of themselves more as entertainers (at least at the box office), and find themselves trying to price accordingly.

A big issue at stake, though, is the impact of this variable pricing on season-ticket holders. Decisions on how to treat their repeat customers with variable pricing vary from team to team. Some teams included them in the variable price increases, and others did not, seeing it as a way of giving them a reason to re-subscribe.

(Updated September 10, 2003)


The article mentions that the ticket price increases tends to not reduce souvenir or concession sales. Why wouldn't the price increases have an impact on these sales?

2. The use of variable pricing ultimately depends on elasticity. What must be different about the elasticity of demand for those wanting to attend a game against a marquee team that would cause them to pay the premium price?
3. If this pricing process succeeds, based on your answer to question 2, what will be the impact on total revenue for the baseball team?
4. If you are forced to choose which particular games you are interested in seeing, how will you utilize marginal utility in your decision? Use a graph of marginal utility in your answer.
Source John Morrell. "How Much for Tickets? You Need a Scorecard." The New York Times. June 8, 2003.

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