You paid how much for the seat in the grandstand?

The Independent newspaper carried a two-page spread the other day about dynamic pricing for spectators at sports events and theatre performances.  See: link
The article starts with the usual comment that dynamic pricing (yield management or revenue management) is widely used in the travel industry, and then continues:

Dynamic pricing, a system used widely by airlines, is revolutionising the British box office. It’s already happening in sport. When Derby County play Blackburn Rovers on Saturday, the price of thousands of tickets will have been determined by computer servers in Indiana, and may go up or down in the days before the game according to demand — or even the weather forecast (not great, as it happens).

The report in the paper describes some of the advantages of variable pricing for customer and service provider, with the usual accounts of how spare seats can be filled and provide revenue for the sports club.  The article was up-front about the problems: many football supporters buy season tickets (full price); there is a risk of making a loss; national rules forbid too many price promotions per year.  But it is clear that more and more sports and theatre events in the UK will use dynamic pricing in the future.

I confess that I was sad that the clubs have had to go to expertise across the Atlantic to find a company that will provide the data analysis and programming to implement the system.  Knowing that there are several airlines and travel companies using such a system already in the UK, it is a shame that it couldn't be provided in the UK.

And I suspect that one passage in the article is not strictly accurate.  This reads:

Witness the outrage this week among Rolling Stones fans about the price of tickets to their 50-anniversary gig (up to £375 for standard tickets). Dynamic pricing wouldn’t work here — the biggest gigs sell out faster than any algorithm could respond 

I am sure that the algorithms could respond fast enough; the problem is the interface with the potential customer, who spends several minutes on the interface, and in that time the algorithm could have changed the price being charged to that type of customer many times. 

However, here is an OR model which is going to affect millions of people in the UK in years to come, and we shall probably get used to it, just as we generally accept dynamic pricing of rail fares and air fares.


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