Ticketmaster uses a dynamic pricing model called “surge pricing” to adjust ticket prices in real time based on supply and demand. This means that ticket prices can fluctuate leading up to and during events based on factors like how many tickets are left and how many people are trying to buy tickets.
What is surge pricing?
Surge pricing, also known as dynamic pricing, means that prices change over time based on market forces. It involves raising prices when demand goes up and lowering prices when demand goes down. The goal is to find the highest price that customers are willing to pay at any given time.
Uber and rideshare services popularized surge pricing in the transportation industry. Uber would raise prices during times of high demand, such as when it rained or during rush hour traffic. The higher prices would entice more drivers to get on the road and pick up passengers. It became a way to balance supply and demand.
Ticketmaster adopted this variable pricing model for event ticketing. Now when tickets go on sale for a popular concert, game, or show, prices can fluctuate leading up to the event and even after it starts based on real-time attendance and sales data.
How does Ticketmaster determine surge prices?
Ticketmaster uses algorithms and machine learning models to continuously analyze ticket sales and event data. The key factors it considers include:
- Current ticket sales and number of tickets left
- Forecasted demand and estimated event attendance
- Pricing and sales history for the event, venue, artist, team, etc.
- Day of week and time of day
- Location and capacity of the venue
As this data comes in, Ticketmaster’s dynamic pricing system adjusts prices in real time to find the optimal market clearing price. The algorithms aim to maximize revenue by pricing based on what people are willing to pay. At the same time, it wants to ensure sellouts and discourage scalpers or brokers from buying up tickets only to resell them at higher prices.
What factors make prices surge?
Here are some of the key factors that tend to increase event ticket prices:
- High demand, low inventory – When an event is extremely popular but has a limited number of seats, scarcity leads to prices surging.
- On-sale rush – Prices often start high when tickets first go on sale to capture initial excitement and demand.
- Weekends and holidays – Events on Fridays, Saturdays, and holidays have the highest demand.
- Opponent/artist popularity – Games, matches, or concerts featuring big name stars or opponents draw more fans.
- Special promotions – Giveaways and special event nights make tickets more valuable.
- Venue changes – Moving to a smaller venue can increase prices due to limited capacity.
- Re-sales – As the event nears and tickets re-enter the market, prices often go up.
On the flip side, factors like high ticket inventory, unpopular opponents, bad weather, and off-peak days can cause prices to drop. The algorithms recalculate prices continuously leading up to and during the event.
How high can prices surge?
There is no absolute cap on how high Ticketmaster prices can surge. In theory, prices can double, triple, or beyond if demand is high enough. However, the company does implement some safeguards:
- Artists and event organizers often set price floors or ceilings when contracts are signed with Ticketmaster.
- Ticketmaster tries to maintain reasonable price ranges for the artist, team, or event based on historical data.
- Their algorithms are designed to avoid public backlash from drastic price hikes.
In practice, most Ticketmaster price surges fall in the 10-25% range compared to initial list prices. However, for extremely popular, low supply events like playoff games or concerts in small venues, occasionally prices will double or more. The table below shows some examples of major Ticketmaster price surges:
Event | Initial Price Range | Surge Price Range | Percent Increase |
---|---|---|---|
Adele 2022 Concert | $59 – $149 | $279 – $599 | 373% |
Harry Styles 2018 Concert | $50 – $90 | $230 | 155% |
NBA Finals Game 7 2022 | $60 – $1100 | $1000 – $6000 | 445% |
NFL Super Bowl 2022 | $3500 – $7000 | $10,000 – $35,000 | 200% |
When do prices surge?
There are certain predictable times when Ticketmaster prices are most likely to surge:
- On-sale dates – Prices usually start high when tickets first become available to the general public.
- As event nears – Demand increases leading up to the event so prices rise.
- Day before event – Prices often peak right before the event when inventory becomes very limited.
- When tickets sell out – Sellouts almost always lead to price spikes for remaining tickets.
- After event starts – Latecomers buying last minute tickets will pay surged prices.
For extremely popular events, prices will remain elevated from on-sale all the way through the event itself as demand outpaces supply. But even for less popular events, prices tend to gradually rise over the last month or week as showtime approaches and remaining tickets sell.
When do prices drop?
There are also predictable cases where Ticketmaster prices will fall below initial list prices:
- Undesirable matches/opponents – Bad matchups or unpopular performers lead to reduced demand.
- Excess inventory – Slow initial sales may lead to prices drops to encourage more ticket sales.
- Last minute cancellations – Cancellations and poor weather can lower prices.
- Weekday events – Weeknight games and shows often have lower prices.
- Holiday weekends – Events on holiday weekends can have reduced demand.
- Low interest events – Some concerts, games, or shows simply don’t generate enough interest.
In most cases, major price drops happen within 1-2 weeks of the event when it becomes clear that demand is lagging and many tickets remain unsold. This encourages last minute purchases.
How to get the best ticket prices
Here are some tips for getting the best Ticketmaster ticket prices and avoiding high surge pricing:
- Buy early when tickets first go on sale to get initial list prices.
- Join fan clubs and artist presales where prices are usually lower.
- Avoid very popular opponents, nights, promotions that spike demand.
- Be flexible on dates to find lower demand events.
- Buy group tickets which are usually discounted.
- Consider less popular venues and event times to avoid sellouts.
- Buy at the last minute when prices sometimes drop due to excess inventory.
While Ticketmaster prices are unpredictable, being smart about when, where, and how you buy tickets can help minimize the impact of surge pricing.
Does surge pricing increase Ticketmaster’s profits?
Yes, dynamic pricing has been hugely profitable for Ticketmaster. By utilizing data and algorithms to adjust prices in real time based on demand, they are able to capture more revenue per ticket. While sports teams, artists, and venues get a cut of every ticket sold, surge pricing has increased Ticketmaster’s per ticket profitability in recent years.
According an analysis done by CitiGroup, Ticketmaster’s gross profit per ticket increased 15% from 2018 to 2019 after it rolled out dynamic pricing technology. For high demand events where prices can double or triple, their profit margins are much higher than typical fees.
In rare cases, surge pricing can backfire and actually reduce profits. This sometimes happens when prices get increased to a level way beyond what most fans are willing to pay. Large sections of seats can go unsold even amid high demand. But in most cases, the dynamic pricing model has been a boon for Ticketmaster’s bottom line.
Does Ticketmaster benefit from the secondary market?
Ticketmaster also benefits from the secondary ticket market – ticket resellers and exchanges like StubHub where tickets are resold for a profit. This is because Ticketmaster often gets a second cut of fees when tickets are resold and transferred to a new buyer on a site like StubHub.
Some analysts estimate 10-20% of all initial Ticketmaster ticket sales end up on secondary exchanges. Ticketmaster can generate higher fees off these secondary sales.
In a controversial strategy, Ticketmaster also sometimes works directly with scalpers and resellers, providing them bulk tickets that can then be resold for a profit. This lets Ticketmaster double dip – generating fees from the original ticket sale and the resale.
Is surge pricing fair to fans?
Many fans complain that Ticketmaster’s surge pricing model is unfair and harms consumers. Some of the criticisms include:
- Prices become unpredictable and confusing.
- It price gouges fans by charging far above fair value.
- Poorer fans get priced out of events they want to attend.
- The same tickets can cost vastly different amounts.
- Fans don’t know when it benefits them to buy tickets.
Groups like Fan Freedom advocate for more transparent and consistent event ticket pricing. They argue surge pricing disproportionately hurts middle class fans rather than wealthy ones.
Others counter that dynamic pricing simply reflects supply and demand like any other industry such as airfare or hotels. Without variable pricing, tickets would simply sell out even faster and on the secondary market at huge markups anyway.
Is Ticketmaster a monopoly in event ticketing?
Ticketmaster is by far the largest primary ticket seller for major concerts, sports leagues, and live entertainment events in the United States. Here are some key stats about its dominance:
- Ticketmaster has over 80% market share of primary ticket sales.
- They are the exclusive ticket partner for hundreds of major venues.
- The company handles 500+ million ticket transactions per year.
- Revenue has grown to over $10 billion annually.
- Their parent company Live Nation is by far the largest event promoter.
This combination of promotions, venues, artists, and ticketing under one roof has led to antitrust concerns and accusations of monopolistic practices. Live Nation has been sued by the Justice Department and consumers for unfairly locking up different parts of the live events business.
Ticketmaster argues it simply offers the best technology and capabilities for large scale ticketing required by top artists and sports leagues. However, its hold on the primary ticket market appears hard to break any time soon.
Conclusion
In summary, Ticketmaster utilizes variable “surge pricing” for event tickets which leads to fluctuating prices based on real-time supply and demand. Their algorithms determine optimal prices to maximize revenue from highest demand events while also discouraging scalpers.
While surge pricing has proven highly profitable for Ticketmaster, many consumers feel it is unfair and limits fan access. But with its entrenched position in ticketing and live events, Ticketmaster’s dynamic pricing seems poised to expand into more events.
Understanding when prices surge, when they drop, and how to find the best deals can help consumers adapt to the changing ticketing landscape.