It is that time of the year. Grand Final.
The NRL, who are in charge of the Rugby League Grand Final, have a dilemma. They have 80,000 seats to fill in the stadium. They could charge a low price, say $50, and easily fill all the seats. But there are lots of people who would happily pay much more. If the NRL charges only $50 per seat then they are missing out on lots of revenue. However, if they charge too much, then half the seats will be empty.
So they use 2 strategies to extract more money from each paying customer.
The first strategy is known as Premium Product Pricing.
The NRL divides the stadium up into sections. They charge more for the seats on the halfway line compared with the seats behind the goal posts. More for seats at the front than for seats at the back. They have even have tiers of pricing for corporates who have food and drinks included, perhaps with a guest speaker. By adopting this strategy they can charge hundreds of dollars per ticket to the customers who are willing to pay more. You will notice that with this strategy they separate the customers based on the product being received. You pay more, you get a better product.
The second strategy is known as Price Discrimination.
This means selling the identical product to 2 different customers at different prices based on their willingness to pay. The NRL does this by giving out promotional codes a few days before the game to fill seats that haven’t already been sold. The people who are given these promotional codes wouldn’t have paid full price. But give them a 50% discount and the offer becomes attractive. From the NRL’s perspective, better to have a discounted bum on a seat than an empty seat.
How could these strategies work in your business?
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