Execute your pricing strategy effectively with pricing automation
From hotels to live events
The Atomize team has a long history and exceptional pedigree in intelligent pricing automation, initially in digital advertising and then in hotels. And now we are providing pricing automation to the live entertainment industry.
It had not been our intention to modify our solution for live events but an opportunity to work with one of the most recognized sports brands in the world presented itself and we embraced it. Working closely with an experienced event organizer we were able to combine their knowledge of live entertainment with our expertise in pricing and AI to develop a best-in-class solution.
Lessons learned from dynamic pricing in the hotel industry
The headlines in the press would suggest that using dynamic pricing for events is a risk not worth taking yet any sensible hotelier will advise that this approach allows them to improve their margins, invest more in their product and create memorable guest experiences. They will also state that failure to deliver value, by charging outrageous prices, will cause long-lasting reputational damage far greater than any short-term gains. These are valuable lessons and it is now evident to a growing number of progressive event organizers that a customer-centric approach to pricing automation is allowing them to successfully walk the tightrope between long-term financial viability and delivering fan value. Increasing ticket prices to cover soaring costs is achievable without a backlash from fans when the organizer offers greater product choice and a wider range of additional services.
Optimize pricing according to changing demand and capture all of the value from your event
At the core of our solution is a sophisticated pricing engine that uses machine learning to model demand and optimize prices in real-time. It does this by ingesting and analyzing live reservation data and other demand signals such as website searches. This means prices increase (and decrease) along a pricing continuum so the organizer is capturing all of the value from their event. Charging the optimal price at all times is a huge benefit for our clients. They had previously used a tiered pricing model so they would only modify ticket prices to predefined price points based on the number of tickets sold even if the optimal price lay between two tiers (see figure below). Now their prices change incrementally based on the actual market demand ensuring no revenue opportunities are lost.
Balance demand and ensure no empty seats
Another challenge they faced previously, was that parts of the venue were selling out long before the rest. Like most event organizers they were ideally looking to fill all parts of the arena at the same pace and avoid having pockets of empty seats during the event itself. They knew this could be achieved by using the price to accelerate or slow down demand for particular products but because the products were linked by fixed modifiers (e.g. Product A is always $50 more than Product B) they could not keep the price of Product A low if Product B was selling quickly and warranted a price increase. As our solution considers the demand for each product independently they are now able to price each product independently within a price pre-determined hierarchy (e.g Product A is at least $20 more than Product B but could be as much as $75 more). This approach also encourages early bookings and directs fans to book less desirable dates and locations.
Controlled price automation in line with your strategy
Pricing automation will ensure that minimal human intervention is required day-to-day however to ensure any price recommendations are consistent with each client’s pricing strategy and philosophy it is prudent to set guidelines such as minimum and maximum prices, minimum offsets between products, maximum price jumps etc. All such guidelines can be configured by the user through intuitive price controls within the application. In the case of our customer, this meant rounding all recommendations so their prices always ended in a zero. They also set a price cap on every product type to ensure prices were in line with previous events and fan expectations.
Increasing revenues and efficiency by reducing manual overhead
As expected our solution has helped the client reduce the manual overhead involved in price setting and administration, and allowed them to capture greater revenues. In this respect, pricing automation is simply a tool that enables event organizers to execute their pricing strategy more efficiently and effectively. However, this is only part of the success formula. Given the fan nature of most events, the system configuration needs to be supported by a clear communication plan to ensure there is full transparency around pricing and the products available. Providing an indication of how dynamic pricing will be applied and how high prices could go prior to the on-sale date prevents sticker shock and conveys appreciation to the fans.
Finding the right balance ultimately depends on making sure the price is backed up by value. Few fans would begrudge an organizer making a fair profit if the service delivered has met or exceeded expectations and they walk away saying “it was worth the price”.
If you are curious to explore the opportunities with price automation and dynamic pricing for events, contact Atomize Ticketing and we will be happy to tell you more.