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arena price increase vs expansion

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From: Bauss
This Post:
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186480.1
Date: 6/3/2011 8:15:05 AM
Overall Posts Rated:
1717
why dont people just increase their ticket price instead of expanding their arena(which costs a lot of money)? increasing the ticket prices dont cost anything so why expand that much at all?

i know theres a ceiling to how high the prices can go but theoretically, wouldnt the smartest thing be to increase the ticket price to the highest point and when you can not go any higher in price, THEN start expanding?

From: CrazyEye

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186480.2 in reply to 186480.1
Date: 6/3/2011 8:21:19 AM
Overall Posts Rated:
959959
why dont people just increase their ticket price instead of expanding their arena(which costs a lot of money)? increasing the ticket prices dont cost anything so why expand that much at all?

i know theres a ceiling to how high the prices can go but theoretically, wouldnt the smartest thing be to increase the ticket price to the highest point and when you can not go any higher in price, THEN start expanding?


short answer they want to earn more, thats why they expand their arena. Prices affect the attendance and 7 costumer for 10 bucks give you more profit then 3 with 20 bucks.

From: Bauss

This Post:
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186480.3 in reply to 186480.2
Date: 6/3/2011 8:26:03 AM
Overall Posts Rated:
1717
1. theres a cost to more customers(building more seats)
2. doesnt expansions affect attendance as well? (85% attendance rate before expansion = or =/= 85% attendance rate AFTER expansion??? holding everything else constant of course)

From: CrazyEye

This Post:
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186480.4 in reply to 186480.3
Date: 6/3/2011 8:33:09 AM
Overall Posts Rated:
959959
1.it is a one time coast, depending on the size it takes different times till you are back in profit, but this moment comes

2. if you just make the arena bigger, is it a bad buissness because you earn the same even when you drop from 80% attandance to 40%(the percentage just give you a indication of a usage rate, but don't affect the income directly), but when you react to it with the right prices and get back to 80% or 90% you earn a lot more money.
(and yes this expansision was to big, but i wanted to make a contra poitn to the percentages - normally is it much better to increase the arena in small or medium steps, because you have a better feeling for the right prices them)

From: Bauss

This Post:
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186480.5 in reply to 186480.4
Date: 6/3/2011 8:37:35 AM
Overall Posts Rated:
1717
why not just increase the prices little by little without expanding? is it not as effective by the game's design?
example: when your attendance is 95%, increase ticket price by $1, the attendance will probably go down to 75%, then when its back up to 95%, increase by 1 more dollar, and so on.

right now, everything you are confirming for me just points to the fact that arena expansion is pointless until you are maxed out on your ticket prices.

Last edited by Bauss at 6/3/2011 8:39:01 AM

From: CrazyEye

This Post:
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186480.6 in reply to 186480.5
Date: 6/3/2011 8:38:54 AM
Overall Posts Rated:
959959
why not just increase the prices little by little? is it not as effective by the game's design?


because you earn less money with it, lower prices mean higher income if you had enough seats.

From: Bauss

This Post:
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186480.7 in reply to 186480.6
Date: 6/3/2011 8:45:23 AM
Overall Posts Rated:
1717
higher prices means higher income as well if your fans keep attending.

if expansion meant more people would come to your games by default THEN i could see the point in expanding but from what i thought and what you said, it doesnt work like that.

From: CrazyEye

This Post:
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186480.8 in reply to 186480.7
Date: 6/3/2011 8:49:13 AM
Overall Posts Rated:
959959
by lower prices more people come to your arena by default ;) But i am out now, because i definately don't know the right words to explain it.

Last edited by CrazyEye at 6/3/2011 8:50:35 AM

From: Bauss

This Post:
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186480.9 in reply to 186480.8
Date: 6/3/2011 8:57:55 AM
Overall Posts Rated:
1717
thanks anyways haha

i was just wondering if anyone did any experiments with this because from what i can estimate (this is a simple profit maximization problem 8D) the revenue increase you get from increasing the ticket price EQUALS expanding the arena(Thus increasing the quantity of seats, allowing more people to come watch. holding price constant). But expanding the arena incurs costs so in the end, its better to increase price first(and when you cant increase anymore, THEN expand).

everything i just said is assuming that your attendance is 95%+, so demand~>supply. If supply<demand then this problem doesnt exist yet.

does anyone have experience with this?

From: Rino

This Post:
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186480.10 in reply to 186480.9
Date: 6/3/2011 9:10:31 AM
Overall Posts Rated:
178178


everything i just said is assuming that your attendance is 95%+, so demand~>supply. If supply<demand then this problem doesnt exist yet.



for attendance to be 95%+ all games, you pretty much have to win all your away games which is very improbable for many teams. for real life what you are saying might be correct but this is just a game and i dont think getting prices higher and not expanding the arena would be beneficial.

From: GM-hrudey

This Post:
11
186480.11 in reply to 186480.9
Date: 6/3/2011 10:20:45 AM
Overall Posts Rated:
32293229
Having more seats gives you more latitude with the pricing to deal with promotion/demotion changes in fan demeanor and better/worse than expected runs.

For discussion, let's assume that the willingness to purchase seats is based on the total cost (i.e., you can sell up to $X in luxury boxes, whether it's a lot of cheaper ones or fewer more expensive ones). Let's say that for a given team, they can sell $4200 in luxury boxes, so that a team with 7 priced at $600 and a team with 3 priced at $1400 is exactly even. What happens if you're slightly off, and only $4195 is available? The unsold seat costs $600 in the first option and $1400 in the second scenario.

Having more of a range for pricing helps as well. If you had one seat to set at a given value, it would be really hard to optimize your income, since a miss would be disastrous (and thus, a downturn from a bad league result more crippling). And in the end, if you never expanded, you'd be limited to $131500 at maximum seat prices for the starting arena, of $139500 if you added 5 luxury boxes.