Dynamic pricing showdown: Digonex launches competitive product to Qcue

As the issue of dynamic pricing in the ticketing industry continues to gain traction in the market, a new player is entering the space.

This week, Digonex Technologies is launching its new dynamic pricing system, called the Sports & Entertainment Analytical Ticketing System (SEATS), which can help teams, venues, promoters and others set escalating or decreasing prices for event tickets depending on various factors, such as the weather, the opponent or what other events are in the area.

Digonex is joining the same market as Qcue, the fast-growing dynamic ticket pricing company that already has contracts with the San Francisco Giants and the Dallas Stars.

"Today's ticketing industry is facing many challenges including a tough economy, declining event attendance and competing forces for the entertainment dollar. Now more than ever, the industry needs a solution that provides a fair-to-all solution for artists, promoters, primary ticket sellers, secondary ticket sellers and consumers," Digonex CEO Jan Eglen, Ph.D., said in a statement. TicketNews posed several questions to Eglen for additional explanation about their system, but he did not immediately reply to that request.

SEATS was developed with the help of Michael Baye, Ph.D., a professor of Business Economics & Public Policy at Indiana University, and Rafi Mohammed, Ph.D., author of "The Art of Pricing."

"SEATS takes into account a variety of key elements that currently impact ticket pricing. Incorporating sophisticated dynamic pricing models into the solution allows Digonex to offer consumers more choices, as well as help increase sales and optimize profitability," Dr. Baye said in a statement.

Dynamic pricing was recently singled out by Ticketmaster Entertainment CEO Irving Azoff as one of the technologies the company is betting on in 2010 to help spur growth.

Some ticket brokers believe dynamic pricing is essentially what they currently do with tickets on the secondary market, by lowering or raising prices based in part on demand. But, many are critical of dynamic pricing because they see it as a way for primary ticket sellers to gain an unfair advantage over the broker community, because the primary ticketers can change prices and potentially undercut brokers. In addition, some season ticket holders worry that they will end up overpaying for their tickets because certain games will see lower prices. The San Francisco Giants and Qcue are seeking to alleviate the concerns of season ticket holders next year by altering the prices that the season ticket holders will pay for tickets, too.

Barry Kahn, Ph.D., CEO and founder of Qcue, welcomes Digonex to the marketplace, but believes that his company's biggest competition is not Digonex but teams that continue to embrace the status quo.

"Once teams embrace the fact that they can be more flexible in their pricing and that technology can help them do that, we have yet to see any competition," Kahn told TicketNews. "So in that view, we definitely welcome additional attention on the dynamic space. Recently, we’ve been hearing a little bit from other companies such as Digonex, who say they can do this. However to date, no one has signed a deal with a major league sports team or implemented dynamic pricing in any commercial form [other than Qcue]."

Kahn sees differences between his company's approach to dynamic pricing and that of Digonex.

"From our understanding, their product relies heavily on trial-and-error, trying different price points to find what works the best, what I believe they refer to as the 'sweet spot.' That is very different than our approach," Kahn said. "We are much more dynamic with our price setting, taking into account the relative prices of different sections in the venue to effect how the building fills up across sections, and helping teams to predict changes in demand before they manifest themselves in sales."

Kahn added, "In addition to being a pricing engine, our system is becoming a tool for demand forecasting and revenue predictions, important functionality for a system like ours, but which seem to occupy a very different space than a trial-and-error 'sweet spot' approach."

According to Digonex, SEATS is customizable and "makes use of dozens of parameters to calculate the best price for event tickets, including seat quality, number of performances, rival performances, third-party offerings and sales patterns among other variables."

In addition, the Digonex system also "helps organizations tackle the issues of ticket cannibalization, substitution, and secondary markets, taking into consideration the impact of a high price driving consumers to lower-priced tickets or different event dates."