As we’ve mentioned before on our blog, the term “dynamic pricing” gets used a lot across industries, vendors, and activity providers. If you’re reading this article, you probably agree that selling online, in advance, is beneficial to your business. We’ve talked in person, at conferences, and in numerous articles about why capturing revenue now is better than capturing revenue later.
But how can you capture the most revenue in advance? We’d recommend a dynamic pricing strategy. Let’s dive into what we mean by those words and what a “dynamic” pricing strategy looks like. At Liftopia, we differentiate clearly between the terms “static pricing,” “variable pricing” and “dynamic pricing”. For the purposes of this blog post, we’re discussing only online pricing, not pricing available at the ticket window.
- Static Pricing: A pricing strategy where price remains constant from day to day.
- Variable Pricing: A pricing strategy where price varies based on the day. Prices do not move over time for a given day.
- Dynamic Pricing: A pricing strategy where prices varies based on day, and prices increase for each day over time. At Liftopia, these price movements are typically quantity driven.
As they are most often conflated, let’s take a look at the difference between variable and dynamic pricing visually.
With variable pricing, each day is priced according to demand, guaranteeing more revenue and yield for peak dates. While you do gain increased revenue predictability over static pricing, you lack the opportunity to grow yield as demand rises and gain further advanced commitment.
With dynamic pricing, each day is priced according to demand and prices for each day rise as you approach a given trip date. You’re able to offer the right price relative to customer commitment, since prices move over time. You gain increased operational and financial predictability over a variable pricing strategy.
While variable pricing is certainly an improvement over static pricing, a fully dynamic pricing plan, when implemented with care, will enable you to increase advanced sales the most effectively.
Interested in trying out dynamic pricing? We can help.