Pricing Strategy for a tour and rental operator and outperform your competition
As the tourism season gets into full swing, we wanted to share with you some tips on how to price your business based upon your pricing strategy and compared to other local businesses in your area.
Steps to Establishing A Pricing Strategy:
Know your demand
When are your peak seasons, times, and days of the week? Price higher during your busy season/days and adjust down during your slower season/days.
2 Understand your costs
Forecast your costs to be sure you are covering all your costs. Be sure to include direct costs (equipment, rent, payroll) and indirect costs (utilities, technology, marketing, etc) in your calculation.
3 Check out your local competition
Research your competition. See who’s in your area and how they are pricing their activities.
Compare Different Pricing Strategies:
Premium pricing - charging a high, rarely discounted price
Useful for companies with loyal repeat customers and stellar reputations.
Differentiation - thinking of price as one of the differentiating factors of your company.
This strategy could attract many tourists looking for a budget-friendly option. Ex, you could aim to be the best budget tourism, rental, or activity company in your area!
Bodies in Seats - aiming to get as many reservations per event date/time as possible
This strategy requires discounts and promotions and opens the door to large groups looking for the best deal!
Price leadership – occurs when a leading operator in your area can exert influence over the pricing for activities that determines what everyone else charges.
If you are this leader, your competition will need to follow your pricing to maintain market share.
Price discrimination - charging a high price to customers who are willing to pay more while still selling to price-sensitive customers.
For example, by offering coupons that are valid only at certain times, you will attract price-sensitive travelers while travelers who want to go at the times they want to go will pay extra for that opportunity. Learn more about the power of promotions here.
Choosing the correct pricing strategy is critical in securing the success of your business. Do your homework and select the one that enables you to meet your goals while staying competitive in your industry.