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This is a no-brainer. The only surprise is that it took this long.

Teams leave a lot of money on the table with status quo pricing. On one end, there’s a massive secondary market that only exists because teams tend to underprice hot tickets. On the other end, seats are often left empty because of factors the team couldn’t have accounted for when they set prices over the winter (i.e. their record, their opponent’s record, the weather, etc.).

Differential pricing isn’t entirely new; it’ll cost you more to see the Red Sox at Yankee Stadium than to see the Royals. But even here, the prices are usually only a few dollars apart, whereas the demand for Boston tickets might be twice that of Kansas City tickets. And why stick with February’s pricing plan come hell or high water, when the relevant factors could be completely different by August?

The variable pricing method should help with all this. Gennaro’s not unveiling his model, but this shouldn’t be such a complicated procedure. The factors he mentions are pretty obvious: weather, promotions, the team’s record, the opponent’s record, the school calendar, etc. They’re also analyzing the secondary market, which will often give a more accurate read of total demand than the team’s actual sales.

The Indians aren’t going to double their gate revenue from this project, but they should get a very solid ROI. Just like opponent-based differential pricing took off after a couple teams experimented with it, don’t be surprised to see this type of model become the norm very quickly.

Feedback? Write a comment, or e-mail the author at shawn(AT)squawkingbaseball.com

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