Tag Archives: Dynamic pricing

Gas Prices are Falling, the Sky is Not

It has often been said that there are at least two sides to every story, and somewhere in the middle is the truth.

I have been thinking about that saying lately as I read the news coverage about the falling price of oil and gas which depending on who you ask is either the best thing ever for consumers, or the beginning of the end of western civilization as we know it.

There are many oil companies in and around Texas and when a gallon of gas sold in the $3 to $4 range they were giddy and beside themselves as they swam Scrooge McDuck style in their big vaults of money.

To be perfectly honest oil companies probably do not have a big money vault, but if they did there is no doubt that they were swimming in it.

With the average price of a gallon of gas below $2, and falling, many oil and gas companies are   shedding employees as they try to stay competitive in a changing market. Photo R. Anderson

With the average price of a gallon of gas below $2, and falling, many oil and gas companies are shedding employees as they try to stay competitive in a changing market.
Photo R. Anderson

Now, that the average price of a gallon of gas is below $2, and falling, those same companies are screaming that the only way they can remain in business at such low prices is by shedding employees as they try to stay competitive in a changing market.

Former oil executives are also telling anyone who will listen that the price of oil will soon rise again much like the phoenix rising from the ashes and that $5 a gallon gas is coming.

All the while the bulk of the country finds more money in their pockets since the price to fill up at the pump is dropping.

More money not going to gas means more money available to spend on other things which in theory should help the economy.

Restaurants and other retailers should benefit from consumers spending less money in gas to arrive at their establishments.

Plus, companies spending less on gas to ship items means they are less likely to need to pass the costs on to those same consumers.

While I do not have an advanced business degree it seems a very simple equation that lower fuel costs are good and higher fuel costs are bad.

When I first started driving many years ago, gas was still under $1 a gallon.

I remember the uproar when the stations had to add the third line of their signs when the price of a gallon of gas had the audacity to cost more than a buck.

The rumblings continued each time gas surpassed another dollar milestone as people dug deeper into their wallets each time they went to the pump as $3 and even $4 gas became a part of life.

The only people who would benefit from $5 a gallon gas also happen to be the only ones saying that it is coming. I guess they are hoping for a self-fulfilling prophecy.

Of course gas is not the only factor affected by the laws of supply and demand.

Prices are higher when demand is great and supplies are low.

Conversely prices tend to drop when supplies raise and demand drops.

The factors of supply and demand are not limited to just oil commodities and play a role in the world of baseball as well.

When a team is red hot and demand to see them in person is high, the prices go up. When a team is struggling in the standings and the turnstile prices usually do not go up.

Under dynamic pricing fans are charged more to see the Boston Red Sox and New York Yankees compared with other teams where demand is not as great. Photo R. Anderson

Under dynamic pricing fans are charged more to see the Boston Red Sox and New York Yankees compared with other teams where demand is not as great.
Photo R. Anderson

Teams call this the dynamic pricing model. In Houston the Astros use this practice to raise the price of admission whenever the Yankees and Red Sox come to town since they know that more people want to see those games and are willing to pay the higher prices.

Personally I have always thought that the same seat in a Ballpark should cost the same amount of money regardless of who the opponent is but it seems that dynamic pricing is here to stay as teams try to find ways to make as much money as they can.

Ticket prices are just one of many factors that go into the makeup of a competitive baseball franchise just as the price of a gallon of gas is just one of the factors that drives the economy.

Falling gas prices will not doom the economy and baseball fans will still pony up the dough if they want to see a team bad enough.

So with Spring Training around the corner it is time to take advantage of the low gas prices and take a road trip to see the action at the Ballpark.

Just don’t be surprised if you see oil executives in fancy suits on the side of the road holding up their sky is falling signs along the way.

Now if you’ll excuse me, I have a Spring Training trip to plan.

Copyright 2015 R. Anderson

Sometimes Dynamic is Far From Dynamic

There are many dynamic things about the game of baseball.

There is the dynamic between a pitcher hurling a ball towards a batter close enough to look tempting to hit but not too close to end up over the wall for a home run.

There is the dynamic of the outfielder timing his jump just right to rob the opposing batter of an extra base hit.

There is the dynamic of a manager trying to decide when to apply an infield shift or make a pitching change based on certain factors or match ups.

There is even the dynamic in the stands of trying to decide how soon is too soon to start the wave and whether it really is wise to eat those chilli cheese fries that look so good but always end with you in pain.

There is also a recent trend of calling things dynamic when in reality they are anything but.

The Houston Astros recently announced plans to adjust their home ticket price in relation to home popular the team coming to town is. Photo R. Anderson

The Houston Astros recently announced plans to adjust their home ticket price in relation to how popular the team coming to town is.
Photo R. Anderson

The Houston Astros recently announced plans to join this group of dynamic blunders when they announced that this season will include dynamic pricing for all seats at all of the games.

The team tried a small roll out of dynamic pricing in certain sections of the ballpark last season with some seats costing more on some days than others.

In the simplest form, dynamic pricing is a way for teams to charge more for games that people want to see.

The formula has been used by teams for years whenever the Yankees and Red Sox would come to town since it was felt that there was a higher demand for those tickets and in turn more money could be charged.

The Yankees, Red Sox, and Cubs have some of the largest fan bases in the nation. So, the dynamic pricing says that those fans will flock to see their team and pay more in the process regardless of where they are playing.  Some teams go even further to cater to their out of town fans.

For years teams have charged more when the Boston Red Sox and New York Yankees come to town.

Teams have charged more when the Boston Red Sox and New York Yankees come to town for several years now.Several times during the game it was unclear whether the Red Sox or the Astros were the home team.

This pampering to out of town fans was put on display two years ago at Minute Maid Park when the Red Sox came to town.

I am not talking about fans cheering loudly for both sides.  I am referring to the public address system seeming to cater to the out of towners by playing various songs that were very specific to what would be played at Fenway Park.

What’s next? Will they erect a miniature Green Monster now that the Red Sox will be visiting more frequently since the Astros have moved to the American League?

There are several reasons why I find dynamic pricing offensive. As a fan who has definitely watched his share of really bad Astros games I am offended that the so called primo games could be priced out of some people’s budgets.

The Astros are set to stuff their piggy bank with dynamic pricing this season that will make certain games more valueble than others based solely on who the visiting team is and what day of the week the game falls on. Photo R. Anderson

The Astros are set to stuff their piggy bank with dynamic pricing this season that will make certain games more valuable than others based solely on who the visiting team is and what day of the week the game falls on.
Photo R. Anderson

And why should every Friday and Saturday game cost more than a Tuesday game just because of the day of the week it falls on?

Dynamics were already in place with the supply and demand factors and economics of baseball.

For years certain teams have drawn better than others and of course games on the weekend will be more packed than those dreaded Tuesday night contests. So, in that way the dynamics are already set.  But charging more for the games that more people want to go to just screams of basic greed.

Plus, with one of the lowest payrolls in baseball, and little advertised plans to change that anytime soon, it is highly unlikely that the extra revenue received will go towards salary.

Most likely the move to dynamic pricing is an admission that the team is going to lose a lot of games this year and attendance is going to suffer.

With most experts predicting the third consecutive 100 plus loss season for the Astros there is not too much winning to cheer for.

The Pittsburgh Pirates are bound to be one of the teams that bring the lowest ticket price as part of the new dynamic approach being rolled out.

The Pittsburgh Pirates are bound to be one of the teams that bring the lowest ticket price as part of the new dynamic approach being rolled out as they and others do not carry the same fan base or prestige of the Yankees and Red Sox.

When I first heard about the ticket plan my first thought was to not give the Astros a single cent of my money next year in protest. Now, in the grand scheme of things the several hundred dollars I spend at the ballpark is small potatoes and will probably not be missed by the team.  But, if there are hundreds, or thousands of people who feel the same way I do then it is bound to hit the team in the pocket.

Now if you’ll excuse me I need to go see about getting my tickets to the Sugarland Skeeters. Something tells me they are going to be very popular this season with the disgruntled fans leaving the Astros behind.

Copyright 2013 R Anderson