We know that pricing can be a constant source of uncertainty for ticketed resorts, parks, and attractions. What’s the right window rate? What’s the right price floor? What should I target for yield or Average Ticket Price (ATP)? Even if you have the hottest attraction in town, setting an intelligent pricing strategy remains the primary driver for whether or not a potential customer converts into a guest. Every pricing decision you make controls the narrative for year-end profits, sales volume, and yield.
If you set your prices too high to meet a stronger yield year-over-year (YoY), you risk a drop in demand and slow bookings, which can backfire on your bottom line. If you set your rates too low to stay competitive, you sacrifice revenue growth and risk volume control. It’s a tug-of-war between price and demand that requires a strategic balance to bring the best of both worlds.
Catalate collaborates with attractions around the globe and has seen firsthand how different pricing strategies can have an incredible impact on managing revenue when done right. While it can seem daunting, it’s simply selling the right ticket, to the right customer, at the right moment, for the right price. We often find that reviewing specific examples is helpful in creating deeper understanding of seemingly complex topics. Below we explore two real-life Partner pricing strategies and show what happens when one attraction sets pricing to increase yield and another follows a Dynamic Pricing approach to drive sales volume and protect yield. Read on to see the results!
Put Your Pricing Strategy to the Test
Yield Management Pricing Strategy
Yield management is aimed at maximizing revenue from a fixed, time-limited resource. This is often used by hotels with a certain amount of rooms or by airlines who book flights with a certain amount of seats. The goal is to sell inventory at the most profitable price point that meets the demand of your guests. Prices vary based on the day and demand. Prices do not move over time for a given day.
- Partner A: Before the season begins, the ticketed attraction Partner A chooses to focus on increasing yield YoY. To achieve this, they set pricing for the entire upcoming season higher than their previous season.
Dynamic Pricing Strategy
In comparison, Dynamic Pricing sets limited ticket inventory at price point tiers that automatically respond to customer demand in real time. This can offer lower price points than in years past to attract more guests; but is also set up to maximize daily revenue when guests are willing to pay more for highly sought-after tickets like weekend days and holidays. This strategy is brilliant for resorts and attractions who must also align their pricing with market factors, tourism trends, seasonality, weather, competitor prices, and guest happiness considerations.
- Partner B: Partner B adopts the Dynamic Pricing strategy, which automatically determines the best price based on demand in real time. This tool sets an automated assessment and evaluation of ticket prices to generate the most revenue possible at that moment.
Both Partners have similar seasonality trends however it’s apparent that Partner A’s YoY unit sales are dramatically down in comparison. Mid-season, Partner A adjusts prices to recover some lost volume and sales but they are still prioritizing yield versus real-time demand and aren’t able to end the year with positive YoY revenue growth.
At the end of the year, Partner B walks away with +33% increase in revenue YoY. Even with lower tiers of pricing, yield on a single-day ticket drops less than 1%, and unit sales are almost universally up, resulting in incredible revenue growth. This pricing strategy balanced yield and sales volume, maximizing their ROI.
Smart Pricing, Big Benefits
In the end, the simple truth is that a Dynamic Pricing strategy intelligently boosts conversion rates and customers are already familiar with it. It’s crucial to keep focus on the right metrics and to price appropriately for every day of the season, which means finding the delicate balance between protecting yield and driving sales. While pricing tickets higher can protect yield, it can create a disproportionate drop in sales volume which can be impossible to recover from, even mid-season.
Above all else, an effective pricing strategy that offers the right price at the right time will reinforce your online sales platform and secure your revenue goals. As effective as this strategy can be, it’s a challenge to implement without the help of a trusted partner with the right attraction ticketing software. Get in touch today and we can build you a pricing plan focused on increasing online revenue for every day of your season.
Catalate is a global pricing and e-commerce company empowering ski resorts, parks, and attractions to increase online revenue. As the only purpose-built ticketing platform for the industry, Catalate has developed successful strategies for hundreds of Partners across $1 billion in online sales.