Price strategies that support increase in revenues
Proper implementation of a price strategy is of fundamental relevance for each type of property, regardless of the size. A good price strategy is the key to success defined as the acquisitions of the prognosed number of reservations and achieving the optimal amount of revenue as a result.
Creating a price strategy brings properties many benefits in the form of generated revenue and laying the foundations for further development of business. It also helps in strengthening reputation and provides for the determination of long-term sources of income and has an impact on the return on investments indices, so important for capital investors.
Building a coherent price strategy for your property requires in-depth market research to perform segmentation of customers and defining the level of rates which the customer is able to accept, as well as understanding the consumer’s thinking patterns and securing a competitive edge.
Price strategies in revenue management
Every price strategy should include the following elements: prognosis, segmentation and market position.
Before making any price decisions, you should make a forecast to find out exactly where your customers come from and how much they will be willing to pay for the offered services. The ability to predict demand helps in making strategic price decisions. A correct prognosis based on market trends and results from recent years can also be helpful during the process of adjusting prices and the scope of implemented promotions. It also provides a clear picture of the increase in future bookings, enabling you to make the necessary adjustments when the forecast does not match your revenues.
Understanding the concept of customer segmentation allows you to create an accurate segmentation of customers for your property and define the prices which will be attractive to each segment.
Customer expectations within the defined segments vary significantly, therefore rates will also differ. Proper distribution of potential customers can bring many benefits in the area of marketing and distribution. Considering individual segments, we can better adjust rates and specify corporate, group or lowest price customers.
Knowledge about the position of your facility in relation to the competition is crucial when determining the price for a room. Establishing competitive prices must take into account the division into room categories, the range of services within the offered rate, and the type of rates used – such as non-refundable or refundable under certain conditions.
Implementing a price strategy
Channel manager features a number of functions that will make the revenue manager’s work more effective. A properly selected tool, correct configuration and maximum utilisation of all channel manager functions enables automatic preparation and implementation of a pricing strategy.
Controlling price levels depending on market circumstances supports the implementation of the property’s price strategy. Price grids permit the application and modification of previously defined prices at any time. It is a very advanced form of price management in the channel manager. Price grids offer maximum flexibility when building your pricing strategy.
In YieldPlanet’s Channel Manager you can use up to 30 different price grids in each season. Channel Manager also permits cooperation with the revenue rules module, enabling the creation of complex distribution rules based on the current occupancy ratio and consisting in closing selected channels or automatically changing prices by a percentage or value. This solution allows your facility to get reservations only from its own website.