It’s not new, but dynamic ticket pricing has taken over what consumers pay for popular entertainment, travel, recreation, transportation and a host of other industries.
Prime tickets to a sold-out Bruce Springsteen concert in the Midwest recently sold for $5,000 each. Why? Because it was the night everyone else wanted to go in the seat everyone wanted. It's called dynamic pricing.
Airlines have long known what days and which flights are most desirable for their customers, and adjusted their prices accordingly.
But the smarter artificial intelligence gets, and the more sophisticated data analysis gets of consumer shopping preferences the more dynamic pricing is edging out those in the cheap seats.
“Even movie tickets, you occasionally start to see that they are selling assigned seats instead of having a fixed price for everyone,” says University of Houston marketing professor Dr. Ye Hu. AMC Theaters is experimenting with the practice, running into headwinds from unhappy customers. AMC Chief Executive Adam Aron says it’s how they can keep the theater business functioning. Dr. Hu says what you pay for an Astros ticket now depends on where the team is in ranking as well as variables like current and projected demand level based on who the opposing team is, what the day and time the game is played.
Standardization is going to be less common going forward. “We should expect more and more sophisticated data mining models that will be able to mine consumer data batter and further optimize the dynamic pricing offered in the marketplace. This will help sellers improve profitability. On the consumer side you may feel consumers are being taken advantage of. It’s not entirely true. All the research I have seen, and the research I have done, shows that consumers are able to strategically adjust their behavior based on whatever pricing model is adopted in a marketplace, so if I have to make a simplified prediction, I would say we can expect to see smarter pricing models and smarter consumers.” The upside of dynamic pricing is that if you're flexible and can attend your desired recreation when other people can, you'll pay a discounted price lower than what a standard price would have been.
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