Dynamic pricing, a strategy where prices fluctuate based on demand, can be a double-edged sword. On the one hand, it lets businesses match supply and demand in real-time, which can be great for both companies and customers.
But on the other hand? Well, just look at the recent Ticketmaster and Oasis ticket fiasco. It’s a perfect example of how this approach can go seriously wrong, especially when it comes to high-demand events like concerts.
Fans were left reeling when ticket prices for Oasis’s highly anticipated reunion tour skyrocketed, with some tickets doubling from £148 to £355. The issue wasn’t just the price hike – it was the lack of transparency and the perception that loyal fans were being exploited.
Ticketmaster’s failure to clearly communicate how its dynamic pricing worked left many fans feeling blindsided and manipulated. The backlash was swift and severe, leading to an investigation by the Competition and Markets Authority (CMA) to assess whether Ticketmaster violated consumer protection laws.
Unlike other industries where dynamic pricing is common, concert tickets present a unique set of circumstances:
1. There’s a limited number of tickets for a specific event
2. Fans generally can’t just choose a different concert as an alternative
3. Many fans have a deep, personal connection to the artist
4. Tickets are often sold in a frenzied, time-pressured environment
These factors create a perfect storm where dynamic pricing becomes less like a fair market mechanism and more of an exploitation of fan loyalty.
The Ticketmaster controversy highlights an important lesson when it comes to dynamic pricing: transparency is key.
If a business uses dynamic pricing, it must be crystal clear about how and why prices may change, avoid creating artificial scarcity or using high-pressure sales tactics, and think about how it will impact customer trust and brand loyalty in the longrun.
While this fluctuating pricing model can work well in industries like travel and insurance, it’s important to recognise the differences. For example, in the travel industry, consumers often have flexibility in dates or destinations, allowing them to shop around for better deals. In the insurance industry, premiums are based on individual risk profiles.
But concert tickets for a specific artist are not interchangeable, and fans have little control over factors affecting the price.
Jeff Bezos famously said, “We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.” This customer-centric approach is crucial, especially when implementing potentially controversial pricing strategies.
Businesses must balance short-term gains against long-term customer loyalty. For high-demand events, businesses could even explore alternative methods to manage high demand, such as verified fan programs or lottery systems, to make the mosttransparent and honest system possible.
The Ticketmaster and Oasis controversy should serve as a wake-up call. What works in one industry might be a disaster in another. Really, the events and entertainment industry might need to rethink the application of dynamic pricingaltogether. Maybe the focus should be on creating fair systems that reward fan loyalty while still dealing with the realities of supply and demand.
In the end, the challenge for companies is to find the right balance between maximising profits and maintaining customer trust. Be transparent, be fair, and think long-term. If businesses can do that, they’ll navigate the tricky waters of pricing without tarnishing their reputation or losing customer trust. And in today’s world, that trust is worth its weight in gold.
