Pricing your suite of products effectively is very important in a multifaceted, seasonal business like a Tour or Attraction. Balancing volume and profitability without overwhelming staff or losing demand is an art business operators take years to perfect.
Here a few of the most well-known Tour and Attraction pricing terms and strategies in the Tours and Attractions space that can serve as a guide for an operator looking to fine tune their pricing approach.
This is the baseline price that your company will charge before any discounts are applied. Determining this price will consider all fixed and variable costs of running your operation ensuring enough profitability to reach your goals. Consider this your starting point price to keep your business afloat.
Once your baseline price, or rack rate, is set – you can markup your prices to increase profitability. Your markup price does not take into account consumer demand or competitor pricing, it is simply an additional percentage added to your price to help reach your business goals.
The opposite of marking up your prices would be applying a discount to rack rate. Rather than increasing profitability, you are aiming to increase the volume of customers who purchase.
Discounts come in many forms, including some familiar strategies from the world of retail:
- Buy One, Get One Free
- Flash Sale
- Free Item with Purchase
Tours and Attractions often use discounting in the form of a season pass or membership, or towards upsell purchases like food and beverage or gift shop items.
Remaining competitive in a Tourism business requires becoming a bit creative to stand out among many different competing offers for customers’ recreational time and dollars. One way to create a more compelling offer is to bundle your tickets with other local businesses.
A tour can often see a bump in sales when bundling with a package of complementary purchases. The trend towards purchasing flight, accommodations, transportation and activities all at once price has become more prevalent over the past several years. With a bit of creativity and business development effort, operators can create a win-win partnership.
Many Tours and Attractions have a clearly defined busy season and slow season. Using the principles of revenue management, a tour should have different goals for each season and price tickets accordingly.
- During busy times, prices should increase with the goal of more profit per ticket.
- During slower times, prices should decrease with the goal of additional customer volume.
Make sure to note not only busy seasons, but individual busy days of the year for your business. Common surges in demand would come from state holidays or local events driving additional local traffic.
Finally, last minute bookings are an opportunity for a full price discovery process. Operators can experiment by taking note of how many people book day-before or day-of activity and begin to raise the price until a noticeable drop off in demand. Customers with disposable income may be willing to pay significantly extra for the last minute flexibility, and this can do wonders for your bottom line.