Lower Concession Prices May Backfire | Strategic Pricing Solutions

The Atlanta Falcons have established a new concessions pricing strategy for the coming season, and they will have the lowest prices in the NFL.  They are lowering most prices in an effort to be more fan friendly. I am not a scrooge, but I think it is a bad decision. At best, they will make less money.  However, the fan experience may also be worse than they think.

All businesses grapple with the question of whether lower prices would generate enough new volume to increase overall profitability.  For a stadium, I just don’t think the math works.  There are many factors to consider, such as how much incremental demand could there be at lower prices, what substitutes the customers have, how competitors will react, etc.  Let’s think about the potential new volume first. A stadium has a fixed capacity.  If the Falcons sell out, there will not be any new buyers.  New sales will have to come from existing fans buying more food and drink.  Of course, if there are plenty of available seats, the number of buyers could increase.  However, lower ticket prices are the most likely thing to attract new fans, not lower concessions.

The next question is whether the existing fans will buy more food and drink.  The answer is almost certainly yes, but how much more is debatable.  Although concession prices are high at sporting events, stadiums still sell plenty of hamburgers, hotdogs, peanuts and beer.  People complain about the prices, but still buy.  If you doubt that, try to remember the last time you went to a concession stand and did not have a several minute wait.  I can’t remember such a time.  Since people are already lining up and buying plenty of food and drink, they may buy a little more, but I doubt they will purchase significantly more.  And, since the percentage increase in unit volume needed is always higher than the percentage price reduction, I see this costing the Falcons money.

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Lower Concession Prices May Backfire.