Looking ahead to the upcoming 2016 Summer Olympic Games in Rio de Janeiro, this article examines the impressively successful pricing tactics employed by the pricing team for the previous Summer Olympics in 2012 in London. The London ticket team’s work demonstrated the powerful combination of high perceived value and excellent communication can drive higher willingness to pay, as the author explains. Hermann Simon is Founder and Chairman of Simon, Kucher & Partners Strategy & Marketing Consultants. He can be reached at hermann.simon@simonkucher.com. His latest book, Confessions of the Pricing Man, tells his story from student to professor to global pricing guru.

The Pricing Advisor, April 2016

Pricing played a decisive role in the spectacular success of the 2012 Olympic Games in London. Paul Williamson, who was responsible for managing the ticket program, used prices not only as an effective revenue and profit driver but, in addition, as a powerful communications tool.

The digits of the prices themselves were designed to send a message without any additional commentary. The lowest standard price was £20.12, the most expensive was £2012 pounds. The number “2012” appeared over and over again in the price points, and everyone knew immediately that such price points referred to the Olympic Games.

For children under 18, the motto was “Pay Your Age”; a six-year-old would pay 6 pounds, a 16-year-old 16 pounds. This price structure generated an extremely positive resonance; the media reported on it thousands of times.

Even the queen and the prime minister publicly praised the “Pay Your Age” tactic. These prices were not only an effective means of communication, but also perceived as very fair. Seniors could also purchase lowered price tickets.

Another important feature of the price structure: there were absolutely no discounts. The management of the London Olympics remained firm about this policy, even when certain events did not sell out. This sent the clear signal about value: the tickets and the events were worth their price. The team also decided not to offer any bundles, a common practice in sports under which a team combines attractive and less attractive games or events into a single package. Local public transportation, however, was bundled together with the tickets.

The organization relied very heavily on the internet both for communications and sales. Approximately 99 percent of tickets were sold online.

The goal prior to the Olympic Games was ticket revenues of £376 million ($625 million). With his ingenious price structure and communication campaign, Williamson and his organization blew that target away, generating ticket revenues of £660 million pounds ($1.1 billion). That was 75 percent more than anticipated, and more ticket revenue than from the preceding three Olympic Games (Beijing, Athens, and Sydney) combined.

The London ticket team’s work demonstrated the powerful combination of high perceived value and excellent communication can drive higher willingness to pay.