By Blake Ng — 31 Jul 2016
Setting your price can be one of the most difficult — and most important — decisions that you make for your tour and activity company. Whether you offer horseback riding adventures along local trails, or you provide guided city tours to international travelers, you need to determine a price that is both enticing to your customers and beneficial to your business.
Decide on a pricing strategy that works best for the products that you offer. It may seem simpler to create a fixed price for each tour that you offer, but that isn’t the best way of managing your tour and activity business. A pricing strategy that accounts for seasonal trends and customer booking patterns is the only way to ensure that you generate the most revenue at any given time of the year. A seasonal pricing strategy, for example, requires you to create different prices for your products during the high and low travel seasons. During the slow season, your prices will be lower in order to encourage people to book with you during the less popular times. During the high season, when your tours are in demand, you can increase your prices and boost your revenue.
Calculate your costs. You need to know the fixed costs for operating your tours, and the marginal costs for each participant on your tour. When you know your costs, you can develop pricing strategies that allow you to maximize your income on a sold out tour, but also allow you to offer discounts in order to earn last-minute bookings. Your price should never be less than the cost of your tour.
Implement a yield management strategy. A yield management strategy allows you to automatically adjust your prices as the seasons change, and requires you to offer live availability across all of your distribution channels. An effective yield management strategy ensures that you receive the most bookings and earnings at any given time of the year, and is the best way to ensure that you continually generate more revenue for your tour and activity company. In order to implement your yield management strategy, you will want to invest in an online booking system that helps you automate most of your administrative tasks.