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One of the key factors for success in the tourism industry is how you price your product. To optimise sales, it is important to ensure that the price is competitive with industry standards. Two identical activity products can rarely be uniformly priced as there are several elements involved that can alter a price structure such as location, the number of participants and season. It can be an incredible challenge to set a price on an activity.

The Starting Point – Penetration Pricing

The launch of a new activity operation can demand lower pricing in order to attract volume and therefore credibility to the business. Once your business has established itself, you can then consider a higher pricing scheme. This scheme is known as penetration pricing. This is not universally applicable to all activity businesses, as there are some businesses such as luxury tours which cannot vary much in pricing.

Designing Pricing with Yield Management

Yield Management is a strategy commonly used in the travel industry to maximise revenue based on fixed, time-limited resources such as airlines seats or activity spots. It is designed to be applied to any type of business that has a fixed number of products to sell and is time-bound. Customers that book well in advance usually pay a lower price for the same product than those booking closer to the desired date. The primary goal of this strategy is to maximise the average revenue per product by effective sales management.

• Seasonal Pricing
  This pricing scheme is the most common strategy among activity operators that use yield management strategies. The idea is to entice customers with cheap pricing in the low season and maximise sales prices in high season when the demand is strong.
  
  
• Time of Day Pricing
  This scheme aims to maximise revenue based on the time of the day the activity is booked for. For example, a Kayaking trip could be priced at $70 between 10am and 5pm and then $40 between 7am and 9.55am which are the less popular hours for this activity.
  
  
• Last Minute Pricing
  This scheme works well when you have the ability to quickly communicate last-minute offers to your customers effectively. This can be planned and communicated well in advance or close to the desired date. Just make sure you don’t have more customers choosing to grab the last-minute deals and therefore lose out on healthy prices.
  
  

The Best Tools for Yield Management

To implement yield management in your activity business, you will need tools to quickly update and manage your rates such as a booking system.  Along with recording sales data, a booking system like RTBS can do many other things such as managing your booking calendar and effectively handling admin work without you having to pick up the phone. To get the most out of pricing strategy, you'll need to keep tabs on bookings, sales and revenue. RTBS’s reporting tools provide you with the important metrics you'll need to track pricing performance. Contact us today for a demo!