7 tour pricing strategies to grow your tour bookings

Updated November 2022 – It can be tricky to put a price tag on an experience, however, despite this, pricing is everything in the tour and activity industry.

Tour costing and pricing will have a significant impact on your ability to compete within your local market. So, how do you set your pricing in tourism to balance profit and customer expectations? Firstly, you’ll want to lock down a tour pricing strategy.

Why is pricing strategy important?

A well-informed pricing strategy will ensure two key things:

• Guests are paying a fair price
• Businesses can cover operating costs while still remaining competitive.

Without a carefully created pricing strategy, businesses risk focusing on one of these factors at the expense of the other.

7  pricing strategies for tour operators

There are a plethora of different pricing strategies in tourism that tour operators can choose from. Here are 7 of the most popular tour costing strategies available for growing businesses in the tourism industry.

1. Marking up

With a markup tour pricing strategy, your prices are set so that each tour booked generates a profit. This requires you, as the tour and activity operator, to identify and understand all costs associated with the tour.

Remember that your costs go beyond the resources and staff members used for the individual tour. You also have to consider the costs of developing the tour, maintaining the business infrastructure, and marketing your products.

Once you have determined what each tour costs your company, you can then set your pricing using your booking payment system. For instance, if your city bus tour that lasts for six hours and accommodates up to 10 people costs $500 for you to run, then you may want to consider setting the price for $100 per person. This would allow you to generate $50 in profit for every person booked on the tour.

A markup pricing strategy is an easy way to ensure that you earn a healthy profit on each tour booked, but it can make it difficult to stay competitive in a market that relies heavily on tourism.

2. Marking down

A mark-down pricing strategy is another option for tour and activity operators to consider. With this tour pricing strategy, you set your tour prices lower in order to increase business, generate buzz, and drive out the competition.

You still need to consider the costs that are associated with each tour, as you do not want your mark-down pricing strategy to force you to lose money on each booking. Identify all costs associated with developing and operating the tour before implementing a price.

With a mark-down pricing strategy, you are going to earn less profit per booking but likely earn more bookings per tour. This is often a great option during the slow season at your tour and activity business. Instead of charging $100 per person for your city bus tour, charge $75 or $80 per person. You may not earn as much revenue, but your tour buses will be filled even when there are fewer travelers in the area at the time.

3. Tour packages

Tourists love packages – and for a good reason. Tour packages are a great way to simplify your trip, providing travelers with a stress-free experience that covers all of their needs. They’re also a great way for businesses to lower their stresses by promoting a unique selling point that speaks to their customer base.

Tour packages allow you to partner with like-minded business owners to cater to niche markets or provide a more convenient experience for your customers. These types of partnerships in tourism could involve reaching out to local restaurants, hotels or other tour and activity providers with the objective of providing a joint service. Businesses can use tour packages to offer valuable experiences to their customers at a lower price, either through disguised pricing (one total cost) or visible pricing (a cost-by-cost breakdown).

4. Seasonal pricing

It’s a well-known fact that the tourism industry is extremely seasonal. Some businesses will be hit harder than others when peak tourist season in their region subsides, but there are ways you can be proactive when attracting tourists during the off-season. One way to achieve this is through seasonal pricing.

Seasonal tour pricing means that businesses can lower their prices during the off-season to attract more customers. This can help to ensure a consistent flow of customers year-round. But adopting seasonal pricing requires more forethought than just lowering your prices when the quiet months arrive. Your seasonal pricing strategy will be mostly informed by your peak-season profitability, and how you can channel those profits into covering your operating expenses during your off-season. This means that seasonal pricing is mostly fixed and will remain consistent throughout the year.

5. Discounting

Discounting is separate from markdown pricing strategies. When tourism businesses implement discounting, they are offering lower prices for special occasions or purchases. This could be Black Friday sales, off-season periods or even bundle deals.

When it comes to yield management pricing, discounting is a powerful tactic. However, like all powerful things, they can be disastrous when misused. The manner in which your business uses discounting must be carefully considered to guarantee that it doesn’t lead to decreased profitability. Don’t desensitize your audience to discounts – they should remain a purposeful tool that is used sparingly for maximum impact.

6. Last-minute pricing

Last-minute pricing is ideal for scooping up last-minute bookings and filling up those empty seats in your tour or activity. By offering last minute deals either online or in-person, businesses can quickly increase their numbers to help reach their capacity and generate a profit.

7. Dynamic pricing

When it comes to choosing a pricing strategy, it’s not always an ‘either-or’ situation. Your business can pick and choose any of the above tactics based on demand and the market. You might even decide to combine multiple types of pricing strategies to develop a completely unique one that better supports your business model.

The right pricing strategy for the right situation

There’s no ultimate guide to creating the perfect pricing strategy for tour and activity businesses. No two business strategies are the same and what works for one company may not work for another. The success of a strategy will ultimately depend on how accurately your business manages its operating expenses (including its tour booking software price) and how it utilizes these insights to fine-tune its pricing.

One way to gain a deeper understanding of your operating expenses is to invest in a software that automatically manages your bookings and provides real-time customer data. A channel management software is a powerful tool that ensures your pricing remains consistent across all channels, allowing your business to streamline its pricing strategies for travel agencies and other third-party sellers. Find out more about how a channel management software could help your business capitalize on the right pricing strategy.

Once the bookings from a channel management software start to flow in, it’s essential that you’re able to process these bookings efficiently. Utilizing an online booking software equips your business with the tools needed to streamline your booking processes. For instance, Rezdy’s booking software features advanced tools such as real-time availability viewer, automatic communication, and integration to various payment gateways so you can accept secure online payments. All these features will not only ease your admin duties, but it’ll also simplify your customer’s booking journey. It’s ultimately a win-win solution for you and your customers.

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