By now I'm sure most of you have heard about the fiasco surrounding the Naperville Marathon.
In short, the race directors announced this new race, in the western suburbs of Chicago. They had it priced at $150, which included the usual perks along with a nicer-than-normal shirt and free photography. Potential racers flipped out about the high price on social media, and the race organizers capitulated and lowered the price to $105 a few days before registration opened.
And then the race sold out on the very first day it was open.
Now, my training in economics extends only as far as two semesters of intro in college, but I don't really think it takes an advanced degree to draw some conclusions here. Namely: demand for this race far outstripped supply, and as a result the race directors undercharged for the race. (Granted the price lowering probably did engender some non-quantifiable good will.) The end result is that consumers were left paying much less for a race than they would have.
Not that anyone is asking me, but in my opinion they should have offered a tiered system for race fees. Not the typical tier, where prices go up at a certain date, but instead a tier with more services.
Offer the first 500 slots for a finite window of time at $75. You don't get anything but the race for that amount. The next 500 slots cost $125, but you get a shirt and a medal. For the next 500 slots, offer a shirt, a medal, race photography, and charge $150. For $175 you can add showers and a finisher's meal. Charge $200 for the rest of the entries. The race will still sell out.
And before you can protest, this wouldn't actually be that hard to do logistically via tabs on one's bib or another simple system like they already do for race shirts. After the Mt. Washington Road Race, I didn't get my meal because I'd lost the small bib tab. I was annoyed, but it was my fault. Life goes on (and I got Dairy Queen, anyway, which was way better).
Race directors are often short-sighted, wanting to get their races full (and therefore get as much cash upfront) as quickly as possible, even if it means losing out on large amounts of potential profit they could make.
For Naperville, there's also a marketing issue. They opened their registration more than two weeks before registration opens for the Chicago Marathon. Chicago will sell out, and that will leave a lot of local runners seeking reasonable options - runners who would have likely paid (and paid well) to run a marathon in Naperville. $200 seems unreasonably high today. But with Chicago at $175, it's easy to see how a local runner could (and would) justify it to themselves - I mean, the last time I ran Chicago, I paid $150 for the registration, plus $250 for the hotel - and I had a place to stay, with my family. If the directors had waited, or at least adjusted their marketing around Chicago (maybe opening a few slots in advance but then holding off on open registration until after Chicago opens), they again could have used this as opportunity to make more money.
I'm as big a fan as anyone of lower race entry fees. That said, there is a huge demand for races right now, and arbitrarily lowering fees to increase accessibility or because you don't like high prices isn't going to work as long as people are clamoring to run races. We need the number of entries in well-run races (including more, newer races) to catch up with the number of runners willing to pay pretty much any asking price for the ability to pin a bib on themselves.
An ineffective pricing model like this does a disservice to both the runners and the organizers: organizers are left making less money than they could, and cheap runners like me are left competing for limited entries with runners who are willing to pay more than I am.
In short, the race directors announced this new race, in the western suburbs of Chicago. They had it priced at $150, which included the usual perks along with a nicer-than-normal shirt and free photography. Potential racers flipped out about the high price on social media, and the race organizers capitulated and lowered the price to $105 a few days before registration opened.
And then the race sold out on the very first day it was open.
Now, my training in economics extends only as far as two semesters of intro in college, but I don't really think it takes an advanced degree to draw some conclusions here. Namely: demand for this race far outstripped supply, and as a result the race directors undercharged for the race. (Granted the price lowering probably did engender some non-quantifiable good will.) The end result is that consumers were left paying much less for a race than they would have.
Not that anyone is asking me, but in my opinion they should have offered a tiered system for race fees. Not the typical tier, where prices go up at a certain date, but instead a tier with more services.
Offer the first 500 slots for a finite window of time at $75. You don't get anything but the race for that amount. The next 500 slots cost $125, but you get a shirt and a medal. For the next 500 slots, offer a shirt, a medal, race photography, and charge $150. For $175 you can add showers and a finisher's meal. Charge $200 for the rest of the entries. The race will still sell out.
And before you can protest, this wouldn't actually be that hard to do logistically via tabs on one's bib or another simple system like they already do for race shirts. After the Mt. Washington Road Race, I didn't get my meal because I'd lost the small bib tab. I was annoyed, but it was my fault. Life goes on (and I got Dairy Queen, anyway, which was way better).
Race directors are often short-sighted, wanting to get their races full (and therefore get as much cash upfront) as quickly as possible, even if it means losing out on large amounts of potential profit they could make.
For Naperville, there's also a marketing issue. They opened their registration more than two weeks before registration opens for the Chicago Marathon. Chicago will sell out, and that will leave a lot of local runners seeking reasonable options - runners who would have likely paid (and paid well) to run a marathon in Naperville. $200 seems unreasonably high today. But with Chicago at $175, it's easy to see how a local runner could (and would) justify it to themselves - I mean, the last time I ran Chicago, I paid $150 for the registration, plus $250 for the hotel - and I had a place to stay, with my family. If the directors had waited, or at least adjusted their marketing around Chicago (maybe opening a few slots in advance but then holding off on open registration until after Chicago opens), they again could have used this as opportunity to make more money.
I'm as big a fan as anyone of lower race entry fees. That said, there is a huge demand for races right now, and arbitrarily lowering fees to increase accessibility or because you don't like high prices isn't going to work as long as people are clamoring to run races. We need the number of entries in well-run races (including more, newer races) to catch up with the number of runners willing to pay pretty much any asking price for the ability to pin a bib on themselves.
An ineffective pricing model like this does a disservice to both the runners and the organizers: organizers are left making less money than they could, and cheap runners like me are left competing for limited entries with runners who are willing to pay more than I am.
Tiered pricing is, indeed, the most efficient market-clearing mechanism in ANY market. We've got the technology... why don't we use it???
ReplyDeleteI personally LOVE races that let me save $5 if I skip the t-shirt.
I have been wondering this for AGES.
DeleteAs far as I can tell, it's a combination of a few things: race directors who are runners first and business people second; "going with the flow" and just using existing systems rather than innovating; need for money upfront/desire for races to oversell.
Bells and whistles with registration are nice, and some people will always want them - but I agree that I don't!
Supply and demand, to an extent, makes sense. People will complain, but people will ALWAYS complain.
ReplyDeleteI have a theory about that, too (I have theory about everything). I think that a problem that plagues running and racing today is that a lot of people are still living in the ethos of the 70s/80s/90s running boom, when road racing was a grass roots effort led by a bunch of dedicated runners, rather than an industry. So, take the NYRR. No matter what they do, people complain and loudly. My theory would say that this is because they purport to be a membership organization and they encourage volunteering - thus suggesting that they would also welcome member input. Yet they not only don't want member input, but they often seem kind of oblivious to it. We're consumers, not members. I mean, if I go to the Target and don't like the price of their toilet paper, I don't start a twitter war against them. I shop somewhere else. Given that the ship has sailed on racing as an inclusive, grass roots thing, I look forward to the day when not liking the prices/amenities of certain races means I just go somewhere else with my money. /rant
DeleteI already put up my 2 cents on this over at magmilerunner so I won't torment your readers with it again, but I sooo wanted to run that race! My husband's mom lives like 5 seconds from Naperville and it would have been perfect. I guess I probably would have registered when they lowered it to $75 except I haven't been paying attention and had no idea it sold out already. Whoopsie daisy. Fack. Anyway, I thought about you when I read maggie's post because one of the race directors got all pouty with her on her blog and I was thinking, "Woooo! Race director-gate 2.0!"
ReplyDeleteI really like your idea for the tiered pricing. I'm doing a 5miler this month that's only $20, or you can pay another $12 for a long sleeve tech shirt. I'm not getting the shirt, but it's nice to have the option.
Oooh, I don't read her. I should. But yeah, I agree re: Naperville. It's about 15 minutes from my parents and I'd do the race in a heartbeat - except it sold out in a heartbeat. But I love it when race directors are uppity! Seriously. It's like they should all be required to take Business 101: how to make money and not be mean to your customers before being allowed to run a race. But yeah. The thing about tiered pricing is that there are going to be people who are willing to pay a ton.
Delete