Impact of Price Floors of Revenue Performance

It’s tempting to believe that raising the starting price point of your pricing strategy will lead to more revenue. Higher prices mean more revenue, right? Wrong! Or at least, not always. We wanted to share a specific example of a ski area who raised starting prices year-over-year on specific dates and what happened.

For the purposes of this case study, let’s call the ski area “Snowy Peaks”. In many past seasons, Snowy Peaks offered an attractive price point for its 1-day adult product on many midweek dates that was heavily used across advertising, both online and offline. At the start of this season, Snowy Peaks decided to increase the previous “promotional” price by $15. 

In the visualization below, you can see Snowy Peaks’ 1-Day adult pricing strategy from the 2018-2019 season in green, and the 2019-2020 season in red. Each dot represents a price point that was sold that day.  You’ll actually notice that most trip dates in the 2019-2020 start at prices higher than the prior year for the same date, but the days that previously were used as a promotional price start significantly higher.

So, what results have we observed so far this season? Revenue from Snowy Peak’s 1-day tickets is down YOY for most trip dates this season, but, dates that previously had the promotional price are down 3x as much as days without the promotional price. Raising the starting price point for those days has led to greater underperformance compared to other days that have changed less in price year-over-year.

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