Pricing and Revenue
Management Strategies
Maximizing Shelf Life
#PACnet15
#PACnet15
Moderator
 Elsie Kuresa » Paciolan
Presenters
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Tony Jilek » The Long Center
Greg Loewen » Digonex
Brian Broussard » LSU
Sandeep Baliga » Ticker
Reece Fischer » Rutgers University
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Tony Jilek
»
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The Long Center
The Long Center for the Performing Arts
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Opened 2008
On time, under budget, no debt, operating reserve
Iconic building
City Terrace
Repurposed from the former historic Palmer
Auditorium
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And The Villagers Danced!
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5
Realities Of Operational Sustainability
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Our Challenge
Only 365 Days…
 $10M budget
 3 Resident Companies 186 days
in large hall
» $1.3M in revenue
 Contributed generates $1.5M
 Balance comes from presenting/rental sales
channels, endowment earnings, sponsorships,
ancillary revenue streams and recoverable
expenses
 The “palace on the hill” - ATX
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Our Approach
 Our model needs to incorporate both traditional strategies as well
as creative and sustainable approaches to fully address the realities
of our operation.
» We chose to view the strategic challenges created by the nature of our
relationship with the resident companies and rental clients as a strength
» Their success means our success
» Strategy starts at home
 First we began reviewing our internal model’s roles and
responsibilities – placing the right person in the right position.
 Animating the City Terrace
» Game Changer
» Community engagement
» Sponsorship Opportunities
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Inventory/Revenue Management
 Dynamic Pricing – Up and down
» Ave $4,033. in incremental revenue PER EVENT
» Use of promo codes with seat status for targeted sales strategy for distressed inventory
 Hold and release strategy that drives demand
» All prices represented on each level of the theatre
 Digital
» Email content strategy
» Social content strategy
 Technology – Strategic Partners
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Paciolan
Qcue
Google
AdRoll
Spredfast
Hootsuite
Blackbaud
 Data analysis for course correction
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Shared Services
 After identifying an effective internal model, our next step was to
avail that model to our clients and partners through shared
services.
 Ticketing, marketing, telesales, digital and social strategy and
execution services are offered-resulting in a positive response
from the community and generating increased ticket sales for our
partners and revenue streams for the center – BONUS – all mission
driven.
 Sales Office
» TLC Ticketing – Regional ticketing 5 Companies/Partners
» TLC Telesales -
9 Venues
 Marketing
» TLC Marketing Services
» Annual Open House
» Santa on the Terrace
 Local and Corporate Sponsorships
» Ticket backs and envelopes, print at home tickets, digital advertising, building projection,
social posts, program inserts, targeted emails
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Recoverable Expenses
 Guest Services > 100% recovered
 Creative localization
and creation
 Media buying
 Sales/Box Office > 100%
recovered
 Outdoor HD projection
 We re-invested in our
team
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POS Strategies
 Audience Development
» Data Mining - Special Occasion
» Understanding your patron profiles
 Upsells/upgrades
» Sales strategy and message that align and support marketing tactics
 Ticket Exchange Insurance
» Takes the worry out of buying early
 Targeted Round-up donations
» Tied to patron engagement
 Telesales
» Successful campaigns – cost kept under 24%
» Proactive phone room
 Thank you for your time <mic drop>
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Pricing & Revenue Management
Strategies
Introduction to Digonex and Dynamic Pricing
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What is Dynamic Pricing?
The application of an algorithm-based solution for regularly adjusting
prices (up or down) in response to changing market conditions
 (Sometimes) useful pricing techniques that are NOT dynamic pricing:
» Premium pricing
» Variable pricing
» Seasonal pricing
» Flex pricing
» Timed entry
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Who is Digonex?
 Founded in 2000 as MusicRebellion, focusing on pricing in the
music industry
 Majority-owned by Emmis Communications (NASDAQ: EMMS)
since June, 2014
 Based in Indianapolis, Indiana; 19 full-time professionals
 Partnership with CAA in live entertainment
 Leader in the development and application of dynamic pricing
science
 Owns 6 patents in the space; 9 other patents pending
 Currently serving clients in retail, professional and college sports,
live entertainment and unseated attractions
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Solution Development Process
Historical sales
Other quantifiable
supply, demand,
competitive factors
Client input on
goals, decision rules
& constraints
Digonex experience
and IP
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Develop / Refine
Dynamic Pricing
Solution
Implement
pricing decisions
Analyze results
Client input /
approval
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Digonex’s SEATS Portal
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Results: HOT97 Summer Jam (New York)
140
120
100
80
60
40
20
0
2013 Actual
Digonex
+18% over previous year
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Results: Touring Comedian
Market #2
Market #1
Market #3
140
140
140
120
120
120
100
100
100
80
80
80
60
60
60
40
40
40
20
20
20
0
0
0
Goal
Digonex
+38% over client goal
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Goal
Digonex
+8% over client goal
Goal
Digonex
+19% over client goal
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Results: Indianapolis Zoo
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Indianapolis Zoo: Demand Shift
66.40%
64.90%
64.30%
57.30%
42.70%
35.10%
33.60%
35.70%
Weekdays
Weekends
2014 NonMembers
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2013 NonMembers
2014 Members
2013 Members
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Indianapolis Zoo: Revenue Growth
$16.43
$14.81
$13.27
2014 Non-Member
Admissions $Per Cap
2014 Budget NonMember Admissions
$Per Cap
2013 Non-Member
Admissions $Per Cap
May-July
Per Cap
+24% vs. PY; +11% vs. client goal
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Greg Loewen
Digonex President & CEO
gloewen@digonex.com
317-684-2950
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Brian Broussard
»
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LSU
Challenges
 Outdated pricing structure
 Long, outdated approval process for pricing
changes
 Setup of new pricing policies
 Education of fanbase
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Key Points
Outdated Pricing Structure
 Pricing structure different by sport (game and/or season)
» Need for uniform structure by season ticket price (only approval by board)
 Pricing tiers throughout facility
» Past allowed one to three prices based on sport. Baseball helped test multiple PL’s.
» Opportunity to create several tiers (sideline, endzone, upper level chairback,
benches)
» Same philosophy for donation pricing structure.
» Create a season ticket holder and individual cost per game to create value for season
purchase and generate additional revenue & quantity sold based on location, etc.
 Introduction of dynamic pricing
» Changing of approval structure allows Athletic Director to make changes as needed.
» Show industry trends, department needs and what overall changes can provide in
terms of increased revenue and sales.
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Key Points
Long, outdated approval process
 Approval required by LSU Board of Supervisors
»
»
»
»
Monthly meetings limits opportunity for changes
Certain times of year off limits. (Legislative session, during season, etc.)
Team performance can change needs, etc. (contractual obligations, etc.)
Athletics changes draw unwanted media attention regardless of how trivial
a change.
 Process for change
» Met with individual board members to test climate and educate.
» Most noticed the need for less governance.
» Reached compromise (set only donation levels and season ticket/parking
prices)
» Future push for greater autonomy. Approval at Presidential level; Limit %
increases/year.
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Implementation
Setup of new pricing policies
 Season ticket price set by Board
» Prices within season set by Athletics Dept.
» Allows for greater weight to be placed upon games with most demand.
 Individual game price now set by Athletics Dept.
» Allows for tiered pricing throughout stadium. Allowing for higher demand
areas to reflect proper pricing.
▫ Student area, Lower level, visitor sections, etc.
 Dynamic Pricing approval by Athletics Dept.
» Approval by AD based on recommendations by CFO & Associate AD –
Ticket Sales & Ops
» Evaluated secondary market sales, performance of teams, game times, etc.
» Considered FY 2014-15 a testing phase in order to show auditors how
system worked.
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New Pricing Structure
Season Ticket Pricing
Opponent
Individual Game Pricing
Lower EZ &
Upper SL
Upper SL
Bench
Upper EZ
Bench
$60
$45
$30
$20
$25
$65
$50
$30
$15
$60
$55
$85
$75
$60
$40
New Mex St
$40
$25
$65
$40
$25
$10
Kentucky
$60
$45
$80
$65
$50
$40
Ole Miss
$85
$80
$100
$90
$85
$85
Alabama
$100
$100
$125
$110
$100
$100
$425
$360
All other areas
Upper SL bench
Sam Houston St
$40
$30
UL Monroe
$40
Miss State
Premium &
Lower SL
 Simple concept – prices set based upon expected demand
 Maximizes revenue and protects against any potential losses of
unsold seating
 Tiered pricing generated approximately $150k additional revenue
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Dynamic Pricing
Dynamic Pricing
Opponent
Premium &
Lower SL
Lower EZ &
Upper SL
Upper SL
Bench
Upper EZ
Bench
Miss State
$85
$75
$60
$40
Ole Miss
$100
$90
$85
$85
Alabama
$125
$110
$100
$100
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Mississippi State
Ole Miss
Ole Miss
Alabama
Alabama
$75 to $80
$100 to $110 to $140
$90 to $95 to $115
$125 to $150
$110 to $125
 Less than 3% of total inventory
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• Student areas/excess inventory
Generated over 35k in test environment
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Education & Lessons Learned
 Slow implementation and soft launch
» Updated website with pricing changes
» Very little negative feedback as prices were always below
secondary market.
» Games were always in high demand when prices changed.
 More aggressive approach in 2015
» Prices will change much more frequently. (no set times but earlier)
» Will inform fans to purchase early & buy packages to get best
prices.
 New structure has better prepared us for the future.
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Sandeep Baliga
»
Professor of Managerial
Economics, Northwestern
University and CoFounder of Ticker
Why Are Auctions Different From Dynamic Pricing?
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Dynamic Pricing
 Traditional Approach: Guess Prices for Different Games and
Sections based on last year’s pricing and historical data. But the
guess is highly unlikely to identify the price that turns out to
maximize the team’s objectives
 Dynamic Pricing uses real time data analysis to set prices. Better
than traditional approach. But creates two issues
1.
2.
If fans are expecting price to fall, they have an incentive to wait.
Reduces ability to cleanly estimate demand from data. Hence,
teams like White Sox say they never cut prices and only raise
them. This creates problem…
Early buyers often have highest willingness to pay. You end up
giving up value to them or forced into low sales.
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Ticker System
 We sell tickets via a Dutch auction (prices go down).
 Key Idea: Everyone pays the final price on game day even if they
bought earlier at a higher price (“Fan Friendly Pricing”)
 Question: Aren’t you making less money than when people pay
the price at which they bought? Answer: People buy at higher
prices because they know they are getting the refund and you can
guess the rest…(Google Ad Words and Amazon Pre-Order Price
Guarantee have similar features)
 Question: What is the main advantage of the Ticker system?
Answer: Our system maximizes learning about underlying
demand. We use this to decide whether to drop prices and by how
much. Of course, we also include secondary market analysis etc.
 We received a Google research award to fund our research.
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NU Football GT BasketBall:
Bidding and Buying
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Back End and Connecting to
Paciolan
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Paciolan Integration
 Has worked seamlessly.
 We get URLs that we link up to buttons on front page
 Behind the scenes, we have access to live reports of
inventory and sales.
 Paciolan has worked out a simple way to execute the
post-game refund via batch processing
 We have documentation and your Paciolan rep can help
you too.
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Some Results
OSU
Purple Pricing
Seats
Original Price
Purple Price
Percent
Change in
Revenue
Sideline
Sold Out
$70
$195
194%
Obscured
Sold Out
$70
$185
164%
Corner
Sold Out
$60
$151
152%
Endzone
Sold Out
$50
$126
152%
Weighted
Average
162%
Michigan
Purple Pricing
Seats
Original Price
Purple Price
Percent Change
in Revenue
Sideline
Confidential
$70
$115
64%
Corner
Confidential
$60
$99
65%
Endzone
Confidential
$50
$91
82%
Weighted
Average
67%
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More Results
 Record breaking season ticket sales
 No Money left on table for secondary market (Crain’s):
The modified Dutch auction system, which guarantees
that buyers don’t pay any more for tickets than anyone
else in their section, ended up selling out at $195, $151
and $126 for seats on the sideline, corner and end zones,
respectively.
On the secondary market, sideline seats have sold for an
average of $190, corner seats for $135 and end-zone seats
for $127..
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More Results
Jeff and Sandeep’s auction system has generated hundreds of
thousands of dollars in incremental revenue from just a few
thousand seats. We use the system for both football and
basketball, and it guides us based upon a variety of factors to
ensure we price the tickets appropriately. Our customers
appreciate that everyone pays the same price in the end..
Pricing is a science with many inherent risks. Jeff and
Sandeep have taken the guesswork out of our pricing. I
couldn’t imagine having the successes we’ve experienced
without their guidance.
Mike Polisky, Deputy Director of Athletics, (External Affairs)
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THANK YOU
SANDEEP BALIGA
Professor of Managerial
Economics
Kellogg School of Management
Northwestern University
E: sandeep@theticker.biz
JEFF ELY
AAKASH SHAH
Professor of Economics
C.E.O.
Northwestern University E: aakash@theticker.biz
E: jeff@theticker.biz
www.theticker.biz
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Reece Fischer
»
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Rutgers University
 Situation
» First season in the Big Ten
» Conference Home Schedule
▫ Penn State, Michigan, Wisconsin, Indiana
» Non-Conference Home Schedule
▫ Howard, Tulane
 Goals
» Maximize Revenue
» Increase the Value of a Season Ticket
» Sellout the stadium
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6 Price Points
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 Sales Calendar
» Monday, July 28: Single game presale to season ticket holders
▫ Limit 2 tickets per game per account
» Monday, August 4: Single game tickets available to general public at
dynamic prices
▫ No quantity limits
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Decision Model
»
»
»
»
»
»
StubHub transaction prices
Tiq IQ market listing aggregation
Daily sales data
eQuery Open Inventory reports
Game schedule
Price Floor
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System Repricing Tool
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Example Prices
Rutgers vs. Penn State
Seat Location
STH Price
Dynamic Price
Lower Sideline - 50 Yard Line
$100
$300
Lower Sideline - 35 Yard Line
$100
$250
Lower Sideline - 20 Yard Line
$100
$210
Lower Sideline - 5 Yard Line
$100
$175
$85
$155
Lower End Zone
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Results
Financial Results
 Rutgers vs. Penn State
» 1,393 tickets
» $122,250 incremental revenue
» $85 tickets sold for $155 - $165
 Rutgers vs. Michigan
» 2,856 tickets
» $190,020 incremental revenue
» $85 tickets sold for $95 - $165
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 Rutgers vs. Wisconsin
» 2,048 tickets
» $59,973 incremental revenue
» $85 tickets sold for $87 - $115
 Rutgers vs. Indiana
» 1,016 tickets
» $12,759 incremental revenue
» $45 tickets sold for $45 - $62
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Drawbacks & Risks
Drawbacks
 A sellout takes time – Managing Expectations
 Negative reaction from fans
 Risk of decreased demand
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Next Steps
Next Steps
 7 Home games in 2015
» Big Ten: Ohio State, Michigan State, Nebraska, Maryland
» Non-Conference: Norfolk State, Washington State, Kansas
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Dynamic pricing for all games
Lower price floor for distressed inventory
Leverage dynamic pricing to upsell season tickets and mini-plans
Leverage dynamic pricing to design mini-plans
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Thank you!
Questions
Please complete either the session evaluation form on your
chair or online at http://pacnet.paciolan.com/schedule.
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