When a business is ready to take its dynamic pricing strategy seriously — and reap the benefits from increased revenue to smoother operational planning — it is time to bring on a pricing partner.
A pricing partner guides operators on how to best implement dynamic pricing, which is a revenue management strategy that continuously adjusts prices for admission based on demand, season, day, time of entry, and when customers buy. When implemented correctly, it improves online sales efficiency and maximizes revenue, all while building consumer confidence and trust.
There are multiple options available in the market today and it can be confusing for the unacquainted to decipher which approach is best. Here, we’ve developed a simple guide to inform internal stakeholders throughout the buying process as they consider and compare types of pricing partners.
These are the six main factors to look for when selecting a pricing vendor for a ticketing business:
1.Flexible Fee Structure
There are a few different ways that pricing software companies make money. The two most popular fee structures are (1) charging fees for implementation and customization and/or (2) taking a percentage of revenue from each transaction.
The latter — a margin-based fee structure — is the stronger option for a dynamic pricing implementation because the pricing partner only makes money when the operator or resort makes money. It is intrinsically in their best interest to help their client partners increase revenue as much as possible.
This was one of the primary reasons that Barbara Corman, Sales Manager at Crans Montana Ski Resort, chose Catalate as its pricing vendor after an extensive search.
“The deal Catalate offered was poised as a joint venture. We work together and we succeed, they succeed. Catalate is paid on commission and we didn’t have to pay for the development because it was done [unlike their other options]. We trusted them because of their experience,” explains Barbara.
2. Significant Data Set
While many software companies and consultants claim to have years of experience, an equally important consideration is the breadth of companies that they’ve worked during this time and the data they amass as a result. This factor directly determines the quality of their data. Operators should look to partner with a vendor whose experience has led them to work with a variety of activities operators and resorts in multiple industries and geographic markets. Another important consideration is if the pricing partner deploys a common pricing model across its customers. Without standardization of data, it’s impossible to use cross-partner comparisons to understand if a pricing strategy is working.
The most strategic pricing partners will use this depth of aggregated data to optimize pricing for their new clients. This data, such as when customers buy, at what price, and how often they convert, is integral in crafting a successful pricing strategy that is specifically optimized for each business. It leads to more accurate modeling and forecasting, which – ultimately – leads to higher revenue.
3. Dedicated Support Team
Pricing-as-a-service platforms are different from many other software applications where operators can go through an onboarding or training phase and then essentially run it themselves. Due to the changing variables of each individual business, pricing strategy is most effective where there is collaboration and data analysis between the operator and platform, which continually refines and adapts the strategy.
Therefore, it is critical to select a partner with a dedicated account representative in customer success. Operators need a partner who is there whenever they need them.
“I liked the fact that I was talking to [Catalate CEO] Evan and he was the decision maker. We hashed out all the details and it was really quick,” says Pete Meyer, operator at ski resort Caberfae Peaks whose online ticket sales grew 53% year-over-year throughout the past decade of working with Catalate. He explains how he was able to work directly with Catalate’s team to optimize his resort’s use of the platform.
4. Fixed Window Rates
Operators would be wise to set and stick to a fixed window rate and partner with a pricing vendor that supports this practice. A fixed window rate means that customers will always pay the same price when paying at the walk-up window vs. changing the window rate depending on conditions or demand. A fixed window rate is important because it gives consumers the confidence to buy online, in advance, when they have a clear idea of what they will pay if they wait to buy.
Anchor prices increase sales, because customers who know what they’ll pay if they wait are able to see the value of purchasing tickets in advance. Guests feel great about their purchase knowing exactly how much they saved by buying ahead of time.
5. Quantity-based Pricing Model
While some pricing vendors opt for a time-based strategy that raises prices within a certain time frame, a quantity-based model that sells a set quality of tickets at a given price point before increasing pricing to the next pricing tier is more effective.
See how Taylor Swift could have used a quality-based pricing strategy to achieve the perfect sellout for her concert series.
Pricing vendors that employ a time-based strategy recommend pricing increases on set days in relation to the start of a trip (25, 15, or 5 days before arrival); however, there is a risk that operators are raising pricing with zero correlation to actual demand.
With a quantity-based approach, prices only increase as demand increases which guarantees that the operator will not be underpricing or overpricing. Additionally, the quantity-based model creates marketing opportunities in which the operator communicates how many tickets remain at a given price before the increase. This creates a sense of urgency which helps increase conversion rates when selling tickets in an e-commerce environment. At the same time, quantity-based strategies limit exposure at low price points, so operators can go out with a strong “from” price without risk of selling too many low-priced tickets.
6. Good Pricing Hygiene
It should go without saying that all pricing vendors under consideration not only understand but practice pricing hygiene in their recommended strategies and models.
Pricing hygiene is the principle that states parks, attractions, and resorts can benefit by adhering to their dynamic pricing strategy instead of making reactive pricing decisions due to external factors. It means skipping the highs and lows of last-minute price drops for a more consistent approach that results in increased customer confidence, repeat visits, and increased revenue.
A business that constantly changes prices through last-minute or unexpected discounts or coupons will impact consumers’ willingness to buy in advance. By allowing demand to dictate the available price and its rise over time, consumers gain confidence and trust in purchasing tickets ahead of arrival, which improves online sales efficiency and maximizes revenue.
As operators consider and compare pricing vendors, keep these six factors in mind to find the most effective, modern, and experienced partner in the market.
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.