If you have been following the news lately in the world of media, pricing and marketing you are aware of Ticketmaster's new pricing strategy. In short, they will allow the prices of tickets for concerts to float up and down (assuming between some minimum and maximum) based on demand. This is basically the same system scalpers have used for years. Ticketmaster is just putting a structure to the concept.
This is all based on the theory of supply and demand. As demand increases, prices increase. As demand falls, prices fall. One would not want prices to go to zero, or conversely astronomically high. A minimum would protect profit margins, and a maximum would protect against the front page article that Ticketmaster was selling tickets at $4,500 a piece to a twelve year old for the next Justin Bieber concert.
but seriously, this is a model that should have been adopted long ago for this type of product. It forces the venues and booking agents to bring top talent, and it rewards those who are producing the best product in the eyes of the customer. So, the question now is, what other products and services would be perfect for this type of model? Here are five quick ideas.
1) Apple iTunes: Please, not every song is worth $.99 or $1.29. Most albums have a handful of good songs on them - if that. Why not make this dynamic. That hot new song could be worth half the album's price and the rest of them just a sliver of it. Don't skoff at that. How many times have you bought an an entire album in the past because of a few songs? Yes, I just used the word album, which means I grew up with vinyl records. But you get my point. You buy the whole thing because the others may grow on you overtime, or you just want to say you have the collection of all the songs etc.
2) Movies: Everyone has seen a movie that they knew was possibly average and then wondered why they just forked out $8. In that same vein, many of us have decided not to see a "Part 3" comedy because we know it will stink with the exception of a few gems and its not worth the $8. But if it was for $5 would you go? I would say the likelihood would be MUCH higher. This reminds me of that often spoken, yet not very intelligent saying of, "Something of something is better than nothing of nothing."
3) Restaurant Meals: Hey, you want that great fillet everyone is getting? Well, there is not many of them so you will have to pay if demand goes up in my little eatery tonight. Don't want to pay that much? Here, have the baked cod for $5. Seriously though, I would venture you could make much more money in a restaurant by pricing your food based on this demand principal.
4) Your local Bar or Tavern: This would be hilarious. Mass runs on beers and wines when their stock price drops. Serious strategy and hedging going on from patrons. Your best friend whispering in your ear at 10:30 pm saying, "When the Pabst Blue Ribbon hits 25 cents, I am going to kill it." I vaguely remember someone telling me of a bar that does this today - perhaps in Manhattan. If you know, send me a note. I must go there.
5) Professional Athlete Salaries: Hey, I know you think you are a stud. Sure, you had a huge year last year. Tell you what. We start you off at an annual rate of $20 million. But, if you hit 20% less home runs or score 50% less touchdowns....well, you know what that means. Oh, and that rookie over there who just KILLED it this year. He just bumped up to your $20 million. No more locked in to 5 year contracts. Pay for performance....just like the rest of us.
Hit me back with your ideas. I think we are on to something here.