PrinterThe wrote:
Yes the numbers are good if you keep them cheap, but the argument is when you try to then charge higher prices. Unless you think Leeds should continually charge very cheap prices.
This is called your price elasticity of demand. How responsive your market is to price. There are three factors to consider in this scenario 1) What is your ideal price point. I.e at Headingley what is the amount where we maximise revenue where if we lower the price we wont make that back in increased fans and if we increase price we lose more revenue from lost fans than we gain from an increased price
2) What is the elasticity of that demand. Whilst we may not make more money selling 20k tickets at £12 instead of 15k at £17, can we get 27k at £10
and thirdly, and perhaps most important for this scenario, can we change the demand. How many of those additional fans we get through at that lower price point can we make sticky. How many of those we can convince to pay the discount price can, once we have gotten them through the door a couple of times, can we then convince to pay the premium price. Or is the price so elastic that we have moved our ideal price point downwards.
You are arguing that price in RL is quite elastic. This is good news and an argument in favour of using Elland Road because an elastic price means lower price, big increase in sales, and the big benefit that Elland Road has is capacity.