chapter  9
8 Pages

Dynamic pricing

Dynamic pricing is the practice of having the price of a particular event – say a concert to take place on the evening of June 16 – varying over the weeks for which tickets are available for purchase. There are two ways in which prices may vary over time. One is where the information is made public, well in advance, that prices will change in a very specific way. For example, it might be announced that tickets are to be initially priced at $12, but will cost $15 if purchased on the day of the event. The other is where the seller announces in advance that the ticket price might (or might not) be changed over time in response to demand, with prices rising should demand be unexpectedly strong and falling if unexpectedly weak. This variant of dynamic pricing is also known as “yield management,” and is familiar to us as a practice in the airline and hotel sectors, but has only recently begun to take hold in the arts and in sports. In this chapter we deal with these two methods of dynamic pricing in turn.