Dynamic pricing usage in sports for revenue management

Abstract

Purpose The purpose of this paper is to examine the extent to which dynamic pricing is utilized in North American professional sports. While industries such as airlines and travel services have employed dynamic pricing for decades, professional sports is only now starting to adopt it. Design/methodology/approach The authors survey and interview high ranking executives and managers in North American sports organizations. A total of 72 managers and executives from the four major North American professional sports leagues as well as other sport properties were surveyed. Descriptive statistics and a basic regression provide insight into perceptions v. actual practice among sports organizations. Findings While most sports organizations perceive high usage of dynamic pricing within their organization, current procedures lag. Nearly 70 percent of respondents believe that their organizations frequently or always apply business analytics to dynamic pricing, but only 30 percent update their prices daily. Fully 50 percent of organizations do not automate decision-making processes, which is a hallmark of dynamic pricing. The perception of constant use of analytics in dynamic pricing intensifies as job title increases. Originality/value As one of the initial surveys looking at the usage of dynamic pricing in North American professional sports, this study provides a glimpse into both the perception and the reality. It suggests that there is still ample room for improvement.

Mapping the Ethicality of Algorithmic Pricing: A Review of Dynamic and Personalized Pricing

“…Algorithmic pricing has spread into multiple industries and is now considered a highly advanced business approach and key driver of business success in terms of increased profits (Cosguner et al 2018;Fisher et al 2018;Spann et al 2015). Electricity and gasoline markets (Balmaceda and Soruco 2008;Faruqui and Sergici 2010), online retailing (Fisher et al 2018), and even the sports and entertainment Table 1 Data collection and selection criteria Search terms "dynamic pricing"; "personalized pricing"; "personalised pricing"; "customized pricing"; "customised pricing"; "algorithmic pricing"; "pricing algorithm" Letters to the editor, commentaries, tutorials, conference abstracts, opinions, viewpoints, as well as studies without direct relation to dynamic/personalized pricing were excluded industry have implemented algorithmic pricing approaches (Bouchet et al 2016;Chen and Chen 2015). Moreover, when it comes to the pricing of professional graduate programs, financial, or insurance products, and services, or information goods, individual prices are already a common practice (Feldman et al 2015;Waldfogel 2015).…”

Using dynamic pricing to target off-peak hours in a brick-and-mortar service environment to increase revenue

“…Sports and entertainment have become an important part of daily life for many. Prices of sporting events are highly differentiated based on the seats and dates (Yang, Shi, Xiao, & Feng, 2009) and can even vary based on the challenging team (Bouchet et al, 2016).…”

“…These discounts may be time restricted, meaning they can only be redeemed during these typically offpeak hours. This method can potentially lead to greater demand, and while larger companies like hotels or airlines have more robust systems, when handled in house, self-promoted discounts may lack the timeliness and effective data collection and analysis to maximize revenue (Bouchet, Troilo, & Walkup, 2016). In-house discounts may be planned days or weeks in advance, but demand may shift and a business may see itself busier than usual, giving away discount when in reality they should not (Ng, Cui, & Harrison, 2018).…”

“…This data should be analyzed systematically and be used in future pricing decisions. (Aktas & Meng, 2017;Bouchet et al, 2016;Boyd & Bilegan, 2003;Burger & Fuchs, 2005;Cleophas et al, 2017;Elmaghraby & Keskinocak, 2003;Norford et al, 1998;Weatherford et al, 2001;Yeoman et al, 2001) Figure 7 Section: 4.4…”

Guest editorial

“…Articles 2, 3, and 4 (Boudreaux et al, 2016;Potter, 2016;Alakshendra, 2016) examine the complex and often controversial role of public finance in sport, with Article 2 considering the financial and managerial aspects of the FIFA corruption scandal and Articles 3 and 4 analyzing professional sports stadium financing. Articles 7 and 8 (Bouchet et al, 2016;Chang et al, 2016) address dynamic aspects of sports ticket pricing. These articles consider the effect of other revenue streams and of future games upon the price of a gate ticket.…”