Thursday, May 7, 2009

Dynamic pricing for fan athletic apparel

Today I walked into the Foot Locker in Downtown Crossing and couldn't help but notice this Jason Bay t-shirt.  It was priced at $22, but clearly the $22 had been slapped over a $20.  I think that pretty well reflects the fortunes of Mr. Bay so far, who is having a great and extremely clutch season for the Red Sox. 

It begs the question - why don't they do more dynamic pricing on athlete specific apparel?  While I was thinking the increase in the Bay shirt was actually smart given how well he's playing, and given that I suspect that shirt will be a best seller over the next few weeks.    Usually you don't see discounts until the player has really gone down the drain and the demand for jerseys is zero.  When I thought about it some more, I was thinking that these jerseys have pretty low marginal cost to produce, but are probably re-sold at reasonably high prices to vendors, which affect how low you'd want to price.  Also, since the shirts cost the same to make, you wouldn't want to cannibalize $22 Jason Bay, Dustin Pedroia and Jonathan Papelbon sales (probably about $19 margin over the actual cost of printing the shirt) with $8 Jason Varitek and $3 Manny Ramirez shirt sales.

I guess I am probably one of the few willing to buy a jersey at a discounted price even if the player has gone downhill.   I guess that explains why I have a Eugene Wilson #26 Patriots jersey and a Antoine Walker #8 Celtics jersey.  

Alas, I looked closer, and Jason Varitek (?!?) had also had a price increase recently from $20 to $22.  Which just seems insane given that Varitek has dropped so far the last two years.


Ted Chan said...

I love that when I post stuff like this it gets hundreds of hits, and all the thought pieces I write get about 10.

Pablo said...

You should have been an economist!

Ted Chan said...

It's more fun being an amateur sometimes!

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