Why dynamic pricing is still as relevant as ever

Years ago, we got used to airline tickets fluctuating in price and then Amazon began dominating online retail and put their own version of dynamic pricing to work.

Since then, dynamic pricing has become increasingly commonplace in online retail.

With its growing popularity, any retailer that didn’t have some form of dynamic pricing implemented might risk missing out on increased margins when competitors run out of inventory. On the other end of the spectrum, a retailer could be missing out on sales opportunities if a competitor drops their prices, leaving that retailer with a relative price that is way too high to be competitive.

Dynamic pricing is still relevant because online retail is as competitive as ever, which means it’s harder to capture pricing opportunities (to maximize margin or revenue, depending on your strategy) in real-time.

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Dynamic pricing at Orlando themepark result in postive trends

In a new article, Richard Balbao interview Dennis Speigel from the Cincinnati-based International Theme Park Services. Comparing the pricing strategies for different parks in Orlando, positive trends are expected this year and beyond.

Tourists are excited to see what’s coming next to Orlando’s big theme parks — something on which park executives want to capitalize. And one way they’re expected do that this year and beyond is through what’s known as pricing structures, or dynamic pricing, which is when the theme parks vary their admission prices based on attendance trends, say experts.

“Pricing is still an issue. Everyone is grappling with it and trying to figure out what is the optimum way to price their product throughout the entire year,” Dennis Speigel, president of Cincinnati-based International Theme Park Services, told Orlando Business Journal. “As we have seen with SeaWorld, they are lowering the bar, but Disney and Universal are holding that bar and rising slowly. But I think parks will, in the future, look at how they can fill some of the lower points through pricing and how they can continue to spread the attendance curve to more of a rolling attendance rather than high peak and low peak — that is the way they utilize their capacity and assets the best and make the most money.”

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Pricetag and dynamic pricing success at Leolandia

The September 2017 edition of IAAPA magazine Funworld contains a great success story about dynamic pricing at Leolandia. Massimiliano Freddi is interviewed and highlights the positive impact of dynamic pricing at Leolandia.

Dynamic pricing is another strategy that has paid off. Traditionally associated with the travel industry, it sets prices according to demand: As demand increases or decreases, prices rise or fall. In 2013, Freddi was concerned about the market’s reliance on special offers: “If you discount all the time, you won’t make more money, and you educate the market to look for special offers. I felt we should put the product first. People needed to feel the urgency to come to Leolandia.”

After meeting with dynamic-pricing specialist Pricetag, Freddi was convinced: “We cut 100 percent of our special offers and put the right prices at the right time on our website. We shifted from selling open-date tickets to fixed-date tickets, which was the first time it had been done in Italy.”

Not that it was all clear sailing. The first three months of the 2013 season were marred by rain. “We had a very poor start. We’d just introduced dynamic pricing, and I had the whole staff saying, ‘You killed the park!’” recalls Freddi. “But then the sun came out in June and the numbers not only recovered, they grew. And the per cap grew. And the in-park guest satisfaction grew because people who had bought tickets online were better prepared. Before, they would just show up at the gate and improvise. From that point, our real growth started. Our numbers are growing through quality, not discounts.”

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The Future of Theme Park Pricing is Creative and Dynamic

What’s the best way to put a price on a day of theme park fun? Very thoughtfully, and preferably using data, algorithms, and flexibility, experts say.

After decades of setting one admission price and sticking with it year-round, the world’s largest theme park operators are starting to inch closer to the models used by the bulk of the travel industry.

“For as long as I can remember, theme parks have always been a place where they would paint the price of a ticket on a piece of wood and nail to to a post at the front of the park,” said Martin Lewison, an assistant professor of business management at Farmingdale State College who studies theme parks. “Once a year or so they would raise the price. They would then discount off that price.”

Although observers and media have questioned for several years whether park operators would adopt demand-based pricing strategies similar to those used by airlines or hotels, only in recent months have the biggest players made moves in that direction.

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Variable pricing may be a new theme at Disneyland

When Disneyland raised prices for its most expensive annual pass this past weekend to more than $1,000, hard-core parkgoers groaned.

Even so, throngs are still expected to fork over cash for the passes or buy daily tickets to converge on the popular Anaheim theme park, which last Christmas had to temporarily turn away visitors.

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Expect theme park industry growth to continue booming

Call 2016 the year of the construction crane for the theme-park industry.

The resorts are on a building spree as they use flashy new rides and shows to compete fiercely for tourists.

The most anticipated attractions — Universal Orlando‘s Volcano Bay water park and Disney’s Star Wars and Avatar lands — won’t open this year. The parks will entice visitors with some new offerings, however.

Nearly as important for the tourist corridor, though, will be what’s closing.

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