StubHub Bets on 'All-In' Pricing Strategy, Sees Growth

Like Final Four tickets, badges for the Masters Tournament -- which kicks off Thursday -- are some of the toughest tickets in sports to come by, not to mention costly.

When fans looking to snag exclusive tickets hit purchase and are met with extra fees, sometimes close to $100, it doesn’t soften the blow. But for StubHub users, added fees are no longer an issue.

StubHub, an Ebay Inc. (NASDAQ:EBAY) subsidiary, rolled out an all-in pricing model starting with Major League Baseball (MLB) last year, getting rid of the extra fees when you check out, and has now extended it to everything on its site.

“We have been experimenting with fees for over a year. A one-fee-fits-all is an antiquated model that no longer works,” StubHub’s Global Head of Communications Glenn Lehrman tells “The biggest challenge we have is making sure consumers actually know that what they’re seeing is all-in pricing.”

“All-in” pricing simply means the prices listed on event pages are the actual prices consumers pay.

According to Lehrman, the new all-in pricing model has driven a 10-point increase in customer satisfaction, adding the spike is greater than for any other thing StubHub has done in the past five years.

In fact, the company is seeing growth in sales, which have “really picked up” over the last six weeks.

“We certainly anticipated that short-term we’d see some sales decline; the reality was that we’d appear higher priced than competitors,” Lehrman says. “What we’re seeing … now that we’re lapping our second year of all-in pricing [with baseball], we’re seeing double digit growth in baseball.”

What’s more, ticket sales for the NCAA Final Four Tournament were up 17% from last year due to the teams’ popularity, according to Lehrman. He said average ticket prices for the event were about the same as last year -- what StubHub made up for was in volume as the stadiums played in were larger.

An average seat for both the semi-final and final game (which StubHub calls a “strip”) goes for about $1,275. StubHub traditionally sells around 10% of the venues, listing about 9,000-10,000 tickets for the Final Four games.

After Tiger Woods, a four-time green jacket winner, withdrew from the Masters last week, ticket prices dropped. The individual ticket reseller has about 100 available for each day of the tournament. In the past two days, each session of the Augusta, Ga.-based tournament has seen a price decrease, according to TiqIQ.

Lehrman says the Masters, as well as the Final Four, are unique animals since they’re “destination events,” so if you want to go, you have to purchase your tickets early. Tickets for the event on StubHub are currently listed at $745 for Friday, $764 for Saturday, $775 for Sunday and $1,655 for a Saturday and Sunday strip.

From the standpoint of a ticket broker, the pricing model shift is a welcome one. Rick Scheffer, who sits on the public relations committee at the National Association of Ticket Brokers (NATB), says the NATB “supports any transparency in the market.”

And Dennis Garrity of ticket broker agency Event USA, who also sits on the NATB board, says StubHub has been “very proactive” at advising their ticket suppliers and brokers that this switch could impact their sales, which he says hasn’t negatively affected his business. StubHub typically nets about 10% of the revenue off each ticket sold.

Garrity says the move to all-in pricing is just StubHub being transparent, adding that competitors might follow suit.

As for Lehrman, he believes “the message has been received loud and clear,” and is “confident that this will have … a strong impact on our bottom line.”

Looking ahead, he said StubHub plans to focus on its rewards program and on mobile ticketing, for which it recently partnered with MLB and certain college teams like the University of Texas.

EBay doesn’t break out numbers for its subsidiaries, but the online marketplace is set to report earnings on April 29. The shares were down 1.6% to $54.25 in recent trade.