Many businesses think it’s OK to increase their prices with inflation every year. It seems fair enough to the owners – if my costs have probably gone up, and my customers are paying a few percent more for everything else, why shouldn’t they pay more for my services too?
Well, not always. Arsenal FC has announced a price increase of 4% this year (in addition to incorporating the 2.5% VAT rise) after freezing prices for the previous three years. But the reason I found out about this was from two outraged tweets:
Will knows that tickets have been held for a while (he says “finally”) and yet he still clearly believes the increase is unfair. So do many other supporters.
It seems clear that fans are angry at Arsenal’s likely lack of success this year (especially as a potential opportunity for a league win seems to have been thrown away). They generally blame the board, who (with the apparent agreement of Arsene Wenger) seem unwilling to buy new defenders and a goalkeeper. And as the club is likely to be sold to American investor Stan Kroenke, there’s about to be a new focus for their displeasure.
In this context, people do not accept the natural justice of an automatic inflationary increase, even when there hasn’t been one for the last couple of years. They want more for their money – either an improvement in facilities, hospitality or seat position, or a better-performing team. If Arsenal were to announce a 15% increase in seat prices, conditional on winning the Premiership or the Champions League, I think most people would accept it quite happily.
One other sneaky rationalisation: the 2.5% VAT increase on top of the 4% inflationary increase. In fact, the 4% inflation figure already includes the effect of VAT, so this is double-counting. There might be better ways to communicate this.
Anyway, here are the two lessons.
- Give your customers something extra in return for a price increase, and not only will you keep them satisfied, but you can raise your prices even more.
- If you can’t offer them something extra, there are alternatives to increasing prices across the board. In this case, the club could reduce the number of lowest-priced seats by reclassifying some of the better ones into the next higher price band. On average, your price will increase but without a direct impact on most customers. The practicalities of this depend on issues like tenure – customers have certain rights to automatically renew their season tickets, so they may not have freedom to make wholesale changes.
Some final thoughts.
Other Premier League clubs don’t appear to have this problem – there seems to be no online surge of disapproval at Spurs or Chelsea’s price increases – though the OFT did persuade Man United last year to change their terms and conditions to treat customers more fairly, and their owners are much more disliked by the fans than Arsenal’s.
And keep in mind: Arsenal still manages to charge the highest season ticket prices in the Premier League – and crucially, the second biggest range of prices after Spurs – and has a waiting list of 40,000 for tickets. So they aren’t suffering too much.