So much for that approach: StubHub, the online ticket reseller, has bagged its all-inclusive pricing model. Seems ticket buyers don’t really like the full truth, even if they ask for it.
The plan, first instituted in January of 2014, factored all fees into the stated price of a ticket. StubHub’s research showed that buyers want transparency.
But the move cost StubHub, the industry leader, market share. Some ticket brokers said their StubHub business dropped by as much as half.
The problem was that few of StubHub’s competitors matched its new pricing model, so StubHubs tickets looking pricier by comparison, says Curtis Cheng, CEO of DTI Management. Cheng operates Dreamtix, a service that facilitates the sale of tickets to live events across multiple marketplaces.
“When consumers search on Google and they see that StubHub is $100 with the fees, and everybody else is around $90 or $80,” that can cause ticket purchasers to go elsewhere, says Cheng.
John Gourville, a professor of business administration at Harvard Business School, says consumers don’t want to think too hard about prices. “A simple shortcut is just to do what you think of as an apples-to-apples comparison, and choose the least expensive one” Gourville says.
Companies know consumers think this way, and take advantage of it, by creating what look like apples-to-apples comparisons, when they are actually apples and oranges. Gourville points to an example of one brand of yogurt charging slightly less than a competitor, but also offering a slightly smaller amount.
E-commerce analyst Sucharita Mulpuru of Forrester Research says those types of pricing practices have left consumers skeptical, and even when a company like StubHub tries to be transparent, it doesn’t work. .
“There’s a psychology of not trusting anyone anyway,” Mulpuru says. “There’s never that level of transparency anywhere really in American retail.”
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