How to Use Pricing Strategy to Limit Economic Downturns


With a recession likely looming on the horizon, it is only practical that operators and owners of ticketed attractions businesses start to think through strategies for how to prepare and weather a potential downturn. Although operators’ instincts might suggest that discounts and promotions are the best way to boost sales, soothe customer complaints, and cover costs during a recession, it is oftentimes not a smart or strategic decision in the long-term.

Reactive price cuts can impact a brand’s image and strategic position by hinting to consumers that demand is low or that more discounts are coming in the future. Pricing decisions should always be part of a long-term strategy for fiscal fitness.

The most strategic and effective course of action for attractions and resorts operators facing a potential recession is to lean on a dynamic pricing strategy.

Dynamic pricing is a revenue management strategy that prices each day according to customer demand with prices typically rising over time as demand increases for the day. When employed diligently, it encourages customers to “buy now” since prices are expected to rise as the date of the activity approaches.

If a recession actualizes, a dynamic pricing strategy can mitigate its effects by providing operators with actionable, real-time data to inform their pricing and operational planning. Dynamic pricing encourages advanced sales, increases flexibility to adapt to changing market conditions, and lets demand inform businesses’ pricing and operational planning.


Benefits of Dynamic Pricing During a Recession

The companies that get their pricing house in order and commit to price discipline before a potential recession are the best positioned to weather the downturn.

Recessions make it more difficult to forecast business and sales volume can become sporadic depending on consumer sentiment, but operators can leverage dynamic pricing during a recession to gain a sense of control during uncertain times.

With a quantity-based approach to pricing, operators can work in real-time and ensure that their costs and resources (staff, F&B, operations) are in line with their incoming guest volumes and associated revenue.

“Companies that excel in dynamic pricing have access to real-time data on changing market conditions, which informs fast decision-making processes to push out price changes quickly and easily. True dynamic pricing depends on real-time variables, such as seasonality, inventory levels, and competitor pricing, and it is powered by automated digital tools,” states the article ‘Why You Shouldn’t Slash Prices in the Next Recession’ in Harvard Business Review.

Dynamic pricing lets demand drive up prices only if and when demand appears and persists by releasing a small quantity of tickets at the lowest possible price the furthest date out from the event, and by using quantity rather than time to determine price movements.

Here is an example of how a water park operator can leverage dynamic pricing: The team can start by pricing 100 advance-purchase tickets at $18 per day. If and when those sell out, they can then increase the price to $25 per day. If that group of tickets also sells out, they will increase the daily entrance fee for the next batch of tickets. This ensures that they continue to drive sales in relation to demand… rather than pricing all tickets at $18 and potentially losing out on revenue when demand is higher than anticipated.

Of course, by working with a dynamic pricing software company like Catalate, this entire process is automated and fully supported by decades of experience and data.

Operators can preempt these ticket sales with a marketing message that tells customers that those willing to commit earlier will have access to a lower price point. For example, the water park could include a ticker on their website that clearly shows how many tickets are left at a certain price before they will increase. This also incentivizes consumers to commit to a purchase, which further drives sales. Consumers will be even more motivated to save in a recession environment!

By selecting the right price for the right consumer at the right time and building in quantity-based constraints, operators can avoid overselling at the lowest price point should demand appear. As demand increases so does the price. Operators who introduce reactionary discounts are at risk of leaving money on the table should demand increase.

Operators can maintain their brand strength and achieve maximum revenue by adjusting the pace of price increases depending on demand. All of this is accomplished while maintaining consumer confidence.

In referring to businesses’ ability to leverage their segmentation strategy during an economic downtown, Eric Mitchell, president of the Professional Pricing Society (PPS), an Atlanta-based association of pricing and marketing managers explains, “The more you can slice and dice your prices and offerings without affecting your brand, the more you can sustain profitability.”

In addition to increasing revenue, this quantity-based approach increases advanced purchase commitment, helps operators implement improved data-driven planning, and boosts consumers’ positive perception of the experience.

Adjusting Operations with Advance Sales Data

Selling online in advance means that park and attraction managers can run their operations more effectively by proactively planning based on pre-sale numbers. Operators can make better decisions around staffing and F&B when they have a better idea of how many people to expect on-site.

While this normally leads to shorter lines, better customer service, and an improved guest experience, it can also limit overspending on operations during a recession. Pre-sale numbers give important insights into actual expected sales volume, which empowers operators to cut costs either on F&B or staffing if needed (and provides welcome peace of mind).
Getting Ahead of It

The real message here is don’t wait.

Operators should take steps to implement dynamic pricing as well as gain access to real-time data and a flexible e-commerce platform before a recession takes hold. That way, they have all the tools they need to drive advance sales, adapt to changing market conditions, and let demand inform businesses’ pricing and operational planning before a recession hits.


Catalate is a full-service SaaS solution that offers customized pricing strategies, an e-commerce platform, and opportunities for enhanced distribution. It has processed more than $1 billion in transactions and manages 50 million price points for customers. Get in touch today.

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