Dynamic pricing may be ‘stuck in the mud somewhere in the swamps of Jersey’

An uproar ensued last week after fans of Bruce Springsteen found some tickets to his first tour in six years fetching prices in the range of $4,000 to $5,000 due to Ticketmaster’s “dynamic pricing” model.

The variable pricing model is designed to devalue secondary ticketing sites like StubHub and SeatGeek by pricing some tickets at “fair value” based on expected demand on resale sites. Instead of scalpers earning the benefit of hyper-demand, the extra money goes to the artist and promoter.

In response to the commotion, Ticketmaster, which merged with promoter Live Nation in 2009, said only 11.2 percent of tickets in the initial tour sale were earmarked for price adjustments based on demand. The rest were sold at fixed prices. The average price of all tickets sold was $262, with 56 percent being sold for under $200 face value.

“Prices and formats are consistent with industry standards for top performers,” Ticketmaster said.

In a statement to The New York Times, Mr. Springsteen’s manager Jon Landau was unapologetic, saying the ticket policy came after surveying “what our peers have been doing.”

“Fans should know exactly what they are getting into before getting involved with an always high stress concert ticket sale,” said U.S. Rep. Bill Pascrell Jr. of New Jersey in a press release.  The congressman is sponsoring a bill to bring greater transparency to the ticket industry.

Dynamic pricing is most often associated with airlines, hotels and Uber, but it increasingly supports ticketing of sporting events and concerts. Harry Styles, Taylor Swift and Paul McCartney have been called out for dynamic pricing.

Many retailers employ dynamic pricing online. Although many footwear, streetwear and luxury sellers likewise see their limited-edition collaborations fetch exorbitant prices on resale marketplaces, dynamic pricing in e-commerce appears to lead to minor price changes generally.

Regardless, critics and proponents have called for greater transparency around dynamic pricing. Marco Bertini, a professor of marketing at Esade–Universitat Ramon Llull, in Barcelona, wrote in a recent Harvard Business Review article, “‘Demystifying’ how prices are set or changed can help establish a trusting relationship with customers.”

• Did $5,000 freeze-out: Bruce Springsteen fans feel betrayed by ‘crazed’ concert ticket prices – Los Angeles Times
• The Case of the $5,000 Springsteen Tickets – The New York Times
• Ticketmaster Says Most Bruce Springsteen Tickets Are Under $200, Only 11 percent Are Part of Controversial ‘Dynamic Pricing’ Program – Variety
• Held Up Without a Gun: Pascrell Knocks Ticketmaster for Springsteen Tour Price Surprise – U.S. Rep. Bill Pascrell Jr.
• The dos and don’ts of dynamic pricing in retail – McKinsey
• Talking to Your Customers About Prices – Harvard Business Review