Pricing Strategies Aim How do businesses decide how

Pricing Strategies

Aim: How do businesses decide how to price their products? Do Now: • Take a notes sheet from my desk.

The Price ü The price is the amount customers pay for the product. ü Price is the value placed on goods or services being exchanged. ü With sports and entertainment the value of the product is based on the perceived quality of the activity/performance and the location of the seat. Frameworks 3. 1

Pricing Strategies – Bundle Pricing ü Bundle pricing is selling several products as a package for a set price. ü Many sporting events are offering bundled products that include event tickets, reserved parking, and/or all-you-can eat packages. ü Theme parks will also bundle their services to include multiple days and multiple theme park admissions combined with hotel packages.

Pricing Strategies – Bundle Pricing Universal Studios Florida Frameworks 3. 2

Pricing Strategies – Bundle Pricing Walt Disney World Bundle Frameworks 3. 2

Pricing Strategies - Groups ü Group packages offer special ticket prices to members of a group when tickets are purchased in large quantities. ü A group usually consists of 12 -15 or more individuals. ü A group package is similar to a volume discount or a quantity discount.

Pricing Strategies – Group Sales ü Important groups for sports and entertainment events include churches, high school and college groups, veterans groups, school reunions, and tour groups.

Pricing Strategies – Prestige ü Prestige pricing is setting a higher than average price to target customers seeking status and high quality. ü Prestige pricing is based on consumer perception of the product’s value.

Pricing Strategies - Prestige Pricing Courtside tickets for an NBA game use a prestige pricing strategy. 1) Pre-season game: $350 (first row courtside) 2) Regular season game: $750 (first row courtside) 3) Playoffs-1 st round: $1, 500 (first row courtside) 4) Playoffs-Conf Semis: $2, 500 (first row courtside) 5) Playoffs-Conf Finals: $7, 500 (first row courtside) 6) The Finals: $15, 000 -$30, 000 (first row courtside)

Pricing Strategies - Leader ü Loss-leader pricing is pricing an item at cost or below to create customer traffic.

Pricing Strategies – Psychological ü Psychological pricing creates an illusion for customers. ü Odd-even is a psychological pricing strategy in which goods or services are given either an odd number or an even number to match the product’s image. ü A courtside ticket for an LA Lakers game might be $750 – not $749. 99. ü A special DVD movie might be priced at $9. 99 – not $10.

Pricing Strategies - Skimming ü Price skimming is a pricing strategy that introduces new products at a very high price. ü Price skimming emphasizes the quality and uniqueness of the new product. The $26 hotdog offered by the Rangers is a good example of a new and unique product offered at a very high price.

Pricing Strategies - Penetration ü Penetration pricing uses a lower than normal price to introduce a new product in order to capture a large market share. ü Minor League Baseball Teams such as the Northwest Arkansas Naturals offer tickets for $9 for reserved seats. A similar ticket for a St. Louis Cardinals game is as much as $57. ü Why do Mi. LB teams use a penetration pricing strategy?

Shark Tank Project – Pricing Get with your group and answer the following on the sheet of paper: • Which strategy are you going to use for your new product or service? • Why did you choose this strategy? When you are done with this, I will give you Part 2