Posted On: Wednesday - June 27th 2018 9:02AM MST
In Topics:   General Stupidity  Curmudgeonry  Economics
Hey, almost everyone likes baseball, or at least doesn't hate it the way lots of us hate soccer (oops that post hasn't been written yet - SPOILER ALERT! SPOILER ALERT!). Not all are into the more obscure rules and the unending statistics. Lot of us don't care to spend damn near a Benjamin to bring the family to a major league game - and that's in the fall when you have coat pockets with which to smuggle your snacks. However, you don't need to do that to enjoy it. Minor league ball is more fun anyway.
Listen, I don't care if these guys are not the best (yet). They still can hit, throw and catch better than I can (not sure about running). The game is the same, except more relaxing for the fans, as if baseball is not one of THE most relaxing games to watch anyway - in person, that is - on TV it bores the living shit out of me ... too many innings, people! Yeah, so this is why it's called not just a "sport", but a pastime.
Here's the thing: If you want people to come regularly to relax and enjoy this truly all-American pastime, you (the owners or stadium management) have GOT TO UNDERSTAND A TERM CALLED THE PRICE POINT, dammit! Really, you don't even need to know that term, you just need to instinctively understand it and be able to do some arithmetic. No, no calculus and number theory are required. Just, DON'T BE STUPID! When we went to the game recently, it was $12 a ticket, and the seats were only 30% filled - at best estimate - on a nice afternoon.
Let me get to the economics, shall we?
Remember this stuff? Me neither, but I LUV good graphs.
Peak Stupidity has written in On the Non-Science of Economics ... ( follow-up here - warning, you're gonna want to listen to some George Thorogood) that economics is NOT a science, per se. As written there, though, the basics, supply and demand, price elasticity, fixed costs/recurring costs and all that are good, good stuff. There is basic math involved with nice graphs that cross each other and stuff (we'll get to that), so one might almost call that initial 1st semester Econ-101 a "science". It's not completely just because, even though we know the relationship between supply & demand, etc., there is no underlying theory that the math is based on besides human psychology. Yes, we know that if you lower the price on the same thing, more people will buy it, or if not, no fewer people will buy it. If we raise the price, fewer people will buy it, or at least we can say that no more people will buy it. The exact shape of the curves can only be determined by observation, and the situation can change over time, or via surveys, which is the possibly useful part of marketing (the advertising business being the useless part - see Madison Avenue and the Advertising Business - Does it even work at all?.)
After this stuff, the study of economics goes downhill pretty fast. Once any government gets involved and starts distorting the hell out of the market, the study of economics is a study of stupidity. I believe that the subject is made long-winded and boring on purpose, as if the students are not put to sleep, or even just into a semi-comatose state, they may vaguely catch on to how the middle-class is getting screwed 6 ways from Sunday by Big-Gov and Big-Biz working closely together. It's all teamwork nowadays!
Oh, yeah, to the subject of the Price Point. I realize now that I really want to put 2 or 3 graphs up to show this simple concept nicely. I am not in a position to do so on my "equipment" here, so that'll have to come in a post in a few days. This is simple though, anyway, but the graphs WOULD be cool, and I'll give more interesting economic principle-based details in that subsquent post.
You've got items to sell, or in this case, seats at the minor league stadium. You want to maximize your revenue, or more importantly, your profits (in general these maximums would coincide based on units, but then, there are taxes - there's that distorting-the-markets crap again). One can make a curve, or at least have an idea, or how many seats you will fill as a function of ticket price. Again, marketing people could tell you that - nah, don't pay them for fairly-erroneous surveys, but some familiar with the minor-league baseball business in this size market should know pretty well the shape of this curve. Better yet, change around the prices slowly - maybe week-by-week - and see what happens.
Then, one can easily know how much profit comes from each additional seat. That sounds like exactly 12 bucks, duh, in my case, but it is not always that simple. In some business, perhaps there are associated costs for more items sold - more shelf space, more employees, etc. Here, that $12 is almost the same extra income no matter how many come, so the curve is almost a horizontal line. Therefore, that first curve on expected attendance vs. ticket price is about all you need. Take function y = f(x) where x = ticket prices and y = number of attendees Then multiply y by x again to get g(x) = f(x)(x) = yx. Find the maximum of that curve, meaning the maximum of the product (attendees x ticket price). That'll be the maximum revenue, and the ticket price that sits under that maximum is what you should charge. OK, well round it up to the nearest 50 cents - that's fine with me.
This is not the only time I've run into a business that is very stupid regarding setting prices at this point that gives them the most profit. I hate to be the one to tell these people how to do business, but come on! It's < 1/3 full at $12/ticket. Try $8.50 for a while. What if you get the stadium 75% full? (BTW, that enhances the experience for some, but for me, really, I don't care if only 50 people are in there with me. I just don't like paying $12, regularly). The stadium is sitting there, with all those seats. You come out ahead. We all come out ahead. Do the math, as they say.
This is your money. It was my money. At $12, once you've got the whole family and buy a few snacks (too hot to wear coats), you're in for serious money. It's not something we'll go to but a few times in a season. Now, at $8, a family of 5 saves $20 EACH TIME, and may go to the games weekly. It's nice to have something like that to look forward to each week.
Yeah, we've seen the movie. You built it, with part of my tax money, I might add, so they're supposed to come. At high ticket prices for minor league baseball, I'm not coming. Don't believe everything Hollywood tells you, I guess the moral of the story is - DO THE MATH!
[UPDATE 06/27 eve:] Speaking of doing the math, I had to change paragraph ~ 8 above to fix the little bit of math necessary to get the max. revenue. Calculus is not really necessary, and even graphs aren't if you're good with a spreadsheet, but a good graphical picture helps explain better.