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Arena pricing suggestion

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245870.1
Date: 7/22/2013 4:43:17 PM
Neverwinter
CGBBL
Overall Posts Rated:
621621
I've just tried to give an advice to a manager in another thread. Thought to share a simple idea about arena pricing, maybe someone can find it useful.

So take this arena for example. http://www.buzzerbeater.com/team/55223/arena.aspx

He has sold 11 luxury boxes out of the 20 available in the last game, at the price of 900.

The basic idea I'm working under is, if you lower your prices, you should make bigger income. Unless you sell out, that is, so we're trying to make a best balance.

First calculate how much money did he get. 11*900=9900 dollars.

How much is the lowest price at which he's going to earn the same amount of cash? 9900 divided with 20 seats, equals 495. So if he sets the price at 495, he'll sell out the seats.

Obviously, he's also going to sell out the seats at some price over 495. Just take a guess here, whatever you set, is definitely better than the current price. You can go with the middle, set at 700, or go closer to the bottom value, maybe 600. Anyway, over time, you'll get closer to the perfect price.

Account in any other variables you might have. Take the averages from multiple games, instead just the last one. And so on..

Hope this helps.

This Post:
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245870.2 in reply to 245870.1
Date: 7/22/2013 5:56:29 PM
Surry Hills Peeps
II.3
Overall Posts Rated:
12171217
I think this is a great starting point for Arena pricing, I read your post in the other thread and I think that guy will find it very relevant.

I just posted on the other thread as to how to maximise takings by focusing on which games to focus on as well.

This Post:
11
245870.3 in reply to 245870.2
Date: 7/22/2013 6:01:30 PM
Overall Posts Rated:
3434
thats real helpful thanks

This Post:
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245870.4 in reply to 245870.1
Date: 7/22/2013 7:19:39 PM
Overall Posts Rated:
6969
The only assumption is that you'll sell out at 495. Since we can only guess about attendance 495, or a bit above, might not actually make more money

This Post:
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245870.5 in reply to 245870.4
Date: 7/22/2013 9:25:05 PM
Neverwinter
CGBBL
Overall Posts Rated:
621621
That's the premise I'm working under. I haven't read it anywhere in the manual, or heard it being mentioned in the forums, explicitly, but it just seems natural.

Smaller prices bring more income(unless it's a sellout), that's why people are expanding the arenas and trying to find prices to fill out about 90-100 percent, because it's supposed to bring the most money.

This Post:
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245870.6 in reply to 245870.5
Date: 7/23/2013 11:06:29 AM
Overall Posts Rated:
6969
I realize that. What I'm trying to say is what if you need to price even lower than the amount you came up with in order to sell out then it would have been more profitable to sell at the original price in the first place.

This Post:
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245870.7 in reply to 245870.6
Date: 7/23/2013 3:02:40 PM
Neverwinter
CGBBL
Overall Posts Rated:
621621
You haven't understood my reasoning.

Let's say you have 10k bleachers. In first scenario, you sell 4k at higher prices. In the second scenario, you sell 6k at lower prices. Naturally, you should earn more money in the second scenario? Now, I haven't seen this being explicitly confirmed anywhere, but I doubt it's otherwise.

So the calculated bottom prices are definitely going to sell out, and furthermore, some unknown higher prices are also going to sell out. That's where you just make a guess.

This should be much better than randomly dropping the prices, simply because now you have a known bottom value, so you can make a well estimated guess.

This Post:
00
245870.8 in reply to 245870.7
Date: 7/23/2013 8:07:46 PM
Overall Posts Rated:
6969
I don't think you get what I'm saying so I'll use a extreme example.

I'd rather sell 1 seat at 1 million than have to charge 0.5 to sell a million seats.

I dunno if this applies to BB in some shape or form at a less extreme level. But I hope you know what I mean now

This Post:
11
245870.9 in reply to 245870.8
Date: 7/24/2013 1:10:49 AM
Overall Posts Rated:
304304
It certainly makes sense. Knowing the high end of what you can price really matters.

For instance, I overbuilt luxury boxes at some point and have 20. I have learned that I can reliably sell 13 of them for $750-850, and that nets me $11K at the current $850. I even think I could go a tiny bit higher, but if I raise the price $50 and lose one sale, then I'm gaining $600 on what I sell but losing the $850 I'm currently getting for that seat I just lost.

Now, if my only concern is selling all 20, then I'd need to sell for more than $550 to make the same $11K I do now. And if I drop the price to $575, I don't think I'd sell all 20. And then I'm losing money.

The point is selling all the seats is not what's important. Maximizing the income from the seats is. You have to think carefully about what a rise in price means in terms of income potentially gained vs. what you would lose if people didn't pay, and in reverse with a price cut.

This Post:
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245870.10 in reply to 245870.9
Date: 7/24/2013 10:52:02 AM
Overall Posts Rated:
32293229
It certainly makes sense. Knowing the high end of what you can price really matters.

For instance, I overbuilt luxury boxes at some point and have 20. I have learned that I can reliably sell 13 of them for $750-850, and that nets me $11K at the current $850. I even think I could go a tiny bit higher, but if I raise the price $50 and lose one sale, then I'm gaining $600 on what I sell but losing the $850 I'm currently getting for that seat I just lost.

Now, if my only concern is selling all 20, then I'd need to sell for more than $550 to make the same $11K I do now. And if I drop the price to $575, I don't think I'd sell all 20. And then I'm losing money.

The point is selling all the seats is not what's important. Maximizing the income from the seats is. You have to think carefully about what a rise in price means in terms of income potentially gained vs. what you would lose if people didn't pay, and in reverse with a price cut.


There's the other side of it that you do need to build in some room for future growth - to add on to your example, I can pretty reliably sell 40 boxes at $400 each, though it's just barely since I rarely hit 40 when I bumped the price to $410. And that's $16k/week, a net gain over what you're pulling now. Of course you then factor in the cost of building, but then also consider that when you move up you'll want the extra seats and be able to profit on them sooner the earlier you have them.

This Post:
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245870.11 in reply to 245870.10
Date: 7/24/2013 11:43:31 AM
Overall Posts Rated:
304304
Excellent point.

In my case, I feel LT and Courtside are the areas where I need to keep adding, and I have been. Those are showing they'll sell if I build them, so that's where my focus needs to be first.