Virtual Business Sports Pricing

The Main Product of a Sports Franchise is Seats(tickets)

Pricing Conflict A team would rather sell a seat for $1 than leave it empty However, if all seats are sold for $1, the team will not make a profit If prices are set too high there will not be enough demand If prices are set too low profits will not be maximized

Goods & Services are Supplied to Consumer Demand

Laws of Supply & Demand Law of Demand: The amount consumers are willing to buy varies with price. –Price Demand Price Demand Law of Supply: The amount producers are willing to make varies with price. –Price Supply Price Supply Law of Diminishing Marginal Utility: Consumers will only buy so much of a product even if the price is low.

If price is too high a surplus will exist Surplus: Supply exceeds demand DEMAND Price Qty. Demanded $952,000 $803,000 $653,400 $504,600 $356,200 SUPPLY Price Qty. Supplied $955,000 $804,400 $653,400 $502,000 $351,000 Surplus

If price is too low a shortage will exist Shortage: Demand exceeds supply DEMAND Price Qty. Demanded $952,000 $803,000 $653,400 $504,600 $356,200 SUPPLY Price Qty. Supplied $955,000 $804,400 $653,400 $502,000 $351,000 Shortage

Equilibrium is the Goal of all businesses Equilibrium Price – Price in which supply and demand meet at the same price.

Elasticity The degree to which demand is effected by changes in price

Elastic vs. Inelastic Elastic Demand – Changes in price greatly effect demand (luxuries) Inelastic Demand – Changes in price does not seriously effect demand (necessities) Sports & Entertainment products are elastic in nature.

Factors that must be covered by Prices All Costs & Expenses –Breakeven Point: Determining the point at which business expenses are covered and there is not a loss or profit. Profit –Markup(margin): The amount of profit added to the breakeven point.

Pricing Terms Price: The amount of money you charge customers for one unit which should reflect what customers will pay. Revenue: Money that is brought into the business, mostly through sales(unit sales x price). Demand: Amt. Of goods or services customers are willing to buy at a given price Yeild Management Pricing: Pricing strategy used whenever the quantity of a product is fixed(I.E. seats) to maximize profits by selling better tickets at higher prices or when demand increases.