Dynamic pricing has become increasingly common in various industries, allowing companies to adjust prices in real-time based on supply and demand. This pricing strategy has now made its way to the live event and concert industry, impacting ticket prices for major tours like Taylor Swift’s upcoming The Eras Tour.
What is dynamic pricing?
Dynamic pricing, also known as surge pricing or demand-based pricing, is a pricing strategy where businesses set flexible prices for products or services based on current market demands. Companies use algorithms to adjust prices in real-time based on factors like:
- Inventory and availability
- Time of day or season
- Competitor pricing
- Customer demand and purchase history
Dynamic pricing allows companies to increase prices when demand is very high and decrease prices when demand is lower. The goal is to find the optimal price that maximizes both profit and volume sold at any given time.
How is dynamic pricing used for concerts and live events?
In the live event industry, dynamic pricing has become a valuable way for concert promoters and ticket sellers to adjust ticket prices in response to market demand. Major ticket sellers like Ticketmaster now use dynamic pricing for many large concerts and tours.
Some key ways dynamic pricing is impacting concert tickets include:
- Fluctuating prices based on demand – Hot shows may see ticket prices adjust upwards over time as tickets sell out. Unpopular shows may see prices drop if demand is lagging.
- Price differences by city/market – Tickets for the same show may be priced differently based on local market demand in each city.
- Price changes by section or seat – Floor seats or front row tickets often command higher dynamic prices than seats in the back when demand is very high.
- Last-minute price spikes – Big tours sometimes see rapid price increases in the last 24-48 hours as the last tickets sell out.
Promoters use past sales data, venue capacity, and projected demand to algorithmically set and adjust pricing. Systems track early sales patterns and scale prices dynamically to find market equilibrium.
Why are artists like Taylor Swift using dynamic pricing?
For hugely popular artists like Taylor Swift, dynamic pricing helps capture maximum revenue from their in-demand tours. Swift knows her rare stadium shows will sell-out quickly, so dynamic pricing allows market demand to push prices upwards for the most coveted seats.
However, Swift has also received some criticism for using demand-based pricing. Some fans accuse her of “price gouging” and limiting access for less affluent fans. Others argue the free market should dictate prices based on what fans are willing to pay.
Here are some key benefits dynamic pricing offers artists like Swift:
- Maximizes revenue from high-demand shows – Swift can capture more revenue without having to manually raise fixed ticket prices.
- Sell more tickets – Adjusting prices downward can help sell out larger venues that may not fill at higher fixed prices.
- Rewards true fans – Diehard fans pay a premium for the best seats, subsidizing lower prices for more casual fans.
- Market-driven prices – Fans ultimately determine prices based on how much they are willing to pay.
Of course, the main criticism is that dynamic pricing can limit access for lower-income fans and price regular fans out of the best seats over time.
What does dynamic pricing look like for Taylor Swift’s The Eras Tour?
Taylor Swift announced her 2023 The Eras Tour in November 2022, her first tour since 2018. Let’s look at some examples of dynamic pricing in action for different cities on Swift’s tour:
Chicago, IL
Original Price | Current Price |
---|---|
$49 – $449 | $149 – $949 |
Many lower bowl seats originally priced $149 are now $949 after early sellouts. Upper bowl seats rose from $49 to $149.
Arlington, TX
Original Price | Current Price |
---|---|
$49 – $449 | $149 – $649 |
Field seats at AT&T Stadium now exceed $649 after starting around $449. Even upper level seats now start above $149, more than triple the original $49 price.
Tampa, FL
Original Price | Current Price |
---|---|
$49 – $449 | $149 – $519 |
While not as drastic as Chicago and Arlington, most lower bowl tickets now start above $519. Upper levels now start at $149, up from $49 originally.
This snapshot demonstrates how dynamic pricing has allowed Swift’s team to raise prices substantially in huge markets with the most demand. Meanwhile, smaller markets like Tampa have seen more moderate price increases.
Does dynamic pricing unfairly impact Taylor Swift fans?
While dynamic pricing has clear benefits for maximizing an artist’s tour revenue, the strategy has received backlash from some fans who feel it makes tickets unaffordable. Critics argue:
- Lower-income fans get priced out of the best seats over time.
- It encourages price gouging and scalping by the artist themselves.
- Fans have no price certainty when buying tickets months in advance.
- Late-buying fans often pay much higher prices than early buyers.
However, Swift has countered by asserting that her team only adjusts an extremely small percentage of tickets using dynamic pricing. The large majority of seats for her shows are still fixed at lower price points to keep shows accessible.
Swift also continues to use tactics like production holds, paperless ticketing, and boosted security to fight scalpers and keep tickets in fan hands. So while dynamic pricing does limit some access, Swift claims it is carefully targeted at the highest demand areas like floor seats.
Conclusion
Dynamic pricing has become an important pricing strategy for artists like Taylor Swift who sell out huge stadium tours. By using demand-based pricing, Swift can maximize revenue from her most devoted fans willing to pay higher premiums for the best seats in major markets.
However, dynamic pricing remains controversial amongst some fans who argue it reduces access and affordability, especially for lower-income fans. Swift has defended only using dynamic pricing minimally for the highest demand ticket types and locations.
Going forward, dynamic pricing will likely expand across the live music industry, for better or worse. Artists must balance revenue maximization against perceptions of fairness and access if they aim to use demand-based pricing while maintaining a fan-friendly image.