PRICING EVENTS 4.07

FACTORS AFFECTING PRICING OF SEM PRODUCTS LEAD TIME MARKET DEMAND – How much of a product customers will buy at a certain price MARKET SEGMENTATION (TARGET MARKET) SMOOTHING – Dividing product into different segments: Time: Pay more money for “Prime time” Place: Pay more money for Court-side seats and less for nosebleed RESPONDING TO COMPETITORS – Non-price: Charge higher prices than competitors for unique product – Price: Encourage sales with lower prices than competitors

MARKET DEMAND PRICE ELASTICITY: – Measure of how sensitive customers are to changes in price Gauges relationship between market demand and price – INELASTIC DEMAND Price changes have little to no impact sales – ELASTIC DEMAND Small price changes have big impact on sales

RESPONDING TO COMPETITORS 2 Types of Pricing Strategies: – PENETRATION PRICING Setting prices lower than the competition – Used to introduce a new product or to encourage maximum participation – SKIMMING Setting prices higher than the competition – Used to keep new competitors out of market or promote “high-class” image of product

PRICING ISSUES COST – Cost of production for good/service If cost more to produce an event then revenue from ticket sells prices = have no business VALUE – What are the PERCIEVED BENEFITS to consumers? Unique perception of each person PERCEIVED BENEFITS: – TANGIBLE: Physical benefits (i.e.: Buying a surfboard with an ankle-band) – INTANGIBLE (i.e.: Buying a surfboard to spend time with friends at the beach) OBJECTIVES – What are the goals of the good/service? Do you want it to seem “high class” or affordable? What type of attendees do you want?

DIFFERENT PRICING OBJECTIVES Company-FocusedCompetitor-FocusedCustomer-Focused Pricing products to ENHANCE THEIR IMAGE COVERING COSTS CREATING PROFITS OFFER LOWEST PRICES Offering the MOST DISCOUNTS Offer “FAIR” PRICE IN CONSUMER’S MIND

TICKET PRICING STRATEGIES SCALING THE HOUSE – Pricing tickets differently based on Location of seat Time of purchase – YIELD-MANAGEMENT PRICING Maximize revenue with venues with limited capacity – Venues with limited seating price tickets differently to have greater revenue potential