Unit 5:
SPORT PRICING
Mrs. Massimo
Sports Marketing
DO NOW: Intro To Pricing
What do you think are some of the
things that marketers have to take
into consideration when setting prices
on their products?
Why do you think this is a crucial process?
 Provide Examples

How do you think prices for
merchandise and services are set?
https://www.teammarketing.co
m/public/uploadedPDFs/2014+
mlb+fci.pdf
WHAT EXACTLY ARE WE
PRICING?
In the sport industry, many products
need to be priced.

Examples would be:
Hard or Soft Goods
 Equipment/Apparel
Tickets
Memberships
Concessions
WHAT EXACTLY ARE WE
PRICING?
Information

Newspapers/Magazines,
Cable & Satellite Service
Signage

Billboards, other types of
sponsorship
Advertising
Broadcast Rights
WHY IS PRICING CRITICAL FOR
SPORT ORGANIZATIONS?
1) Constantly Changing:

Prices are readily modified for competitiveness.
2) Strong Marketing Tool for Attendance

Price and attendance have a direct
relationship.
3) Highly visible in the media and to the
public.
BASIC PRICING FORMULA
The central equation for sport pricing in
all situations is:
Satisfaction=Benefit-Cost
Example:
How much are you willing to pay for
the ultimate experience?
EXAMINING
COST VERSUS PRICE
Consumer Cost
 The consumer’s total dollar value for
the entire entertainment package.
 Includes travel, concessions, tickets,
parking, etc.
Producer Cost
 The amount of money it takes to
create the product.
Price
 The dollar amount the producer
charges the consumer.
 Profit= (Price - Producer Cost)
It is important for a producer to
keep in mind all the consumer
costs involved in appreciating their
sport product.
 How much does it actually cost
to go to an NFL game?
VALUE VERSUS PRICE
A product will only be successful when the
consumer believes the value to be greater
than the price.

Example: College Tuition
The following elements may affect a Product’s
Value:





Convenience
Aesthetics
Cleanliness, comfort, security
Availability
Durability
CONVENIENCE
COSTCO
$12.99 for the 30-pack which is about 43 cents per 16.9 oz bottle
How much do you pay at 7-11?
AESTHETICS
According to Consumersearch, "A study published in the
British Journal of Sports Medicine in October 2007 found
that low- and medium-costrunning shoes offered the same cushioning
and support as more expensive running shoes."
CLEANLINESS, COMFORT, SAFETY
COMPONENTS OF PRICING
When setting a price, a marketer must take the
following components into consideration:
 Production Costs
 Market Conditions
 Supply/Demand, State of Economy


Competitors’ Prices and Products
Organizational Objectives
 Profit goals

Product or Event Frequency
 Football Game vs. Baseball Game
PRICE DETERMINATION
Who determines the price of a
sport product?
The
The
The
The
Consumer
Competitor
Company
Climate
PRICE DETERMINATION
-Who determines the price of a sport product?
THE 4 C's OF PRICE DETERMINATION
THE CONSUMER
--does value=price?
--opinions of friends
--demographics
THE COMPETITOR
--your product or
your price needs
to be better.
THE COMPANY
--your own financial
situation
THE CLIMATE
--external factors that
the marketer cannot
control.
rental agreements
TV contracts
sponsorship agreements
payroll costs
pricing laws
govt. regulations
political climate
economy and attitude
TYPES OF PRICING
METHODS
COST-PLUS PRICING
GOING-RATE PRICING
DEMAND-ORIENTED PRICING
PEAK-LOAD PRICING
PENETRATION PRICING
TYPES OF PRICING METHODS
COST-PLUS PRICING

Base your prices on your own costs, then determine the profit
you desire.
 Most commonly combined with one of the other methods.
GOING-RATE PRICING

Charge what your competitors are charging.
DEMAND-ORIENTED PRICING

Survey consumers to see what they are willing to pay.
Spalding NEVERFLAT Official
Game Basketball (29.5")
Costs $10-12 to produce
Retail Average Price $38.32
Modells $39.99
Sports Authority $34.99
Dick’s $39.99
TYPES OF PRICING METHODS
PEAK-LOAD PRICING

Change prices according to seasonal
demands.
EX. Tailgating and camping
supplies rise during Football
season.
PENETRATION PRICING

Begin by offering low prices to
establish a fan base, then slowly
increase your prices.
http://www.nycfc.com/tickets