STAY ABOVE THE FLOOR: Pricing for a Higher Per Cap
In our attractions world, we often measure our financial success by Average Ticket Price. Sometimes called per capita spend, this data metric allows us to better understand how our decisions impact the bottom line-in small, bite-size pieces, one person at a time. While this is an absolutely fantastic way of looking at the data, we often make the decisions relative to ticket prices, promotions, and discounts without considering the impact that it has on average ticket price. We offer discounts like:
BUY ONE, GET ONE FREE
While none of these offers is inherently a bad promotion, they are often rooted in emotion and desperation instead of coming from a strategic revenue position. To understand precisely what I mean here, you need only look to some of the larger theme park operations for best practices relating to revenue management. Neither Disney nor Universal will not discount their lowest-priced general admission ticket--no matter what. This isn't because someone is being stubborn or just too proud to approve such a decision. No, this is a principled, strategic approach designed to maximize revenue. It's an approach that is woven into the fabric of all promotions and part of the culture within these marketing departments. Do not discount your lowest ticket price. Instead, take the best packages that you've created and design discounts that demonstrate value and encourage purchase of the higher ticket offerings.
Below, I've included a summary of some topics I've written of in the past along with some new thoughts:
Promote the Packages. Tie value and offer discounts on packages. However a word of caution. Always consider value and allocations when applying discounts to packages. One trick that I've learned along the way is that it's always better to discount in dollars (i.e. $7 OFF) rather than in percentages (20% OFF). Guests prefer to see the dollar discount because it's more tangible than percentage. This approach also makes it easier for an auditing team to apply the discount gate admission or an allocated amount of each included component.
Drive Online Sales. Require that discounted tickets be purchased in advance over the phone or via the Internet. As I've noted in previous articles, coupons must serve a purpose like driving new business or encouraging a subset like locals to visit during the slow season. Technology can help. Many of the newer ticketing systems include features that allow for geo-fencing of special offers. Once guests arrive at your facility, they shouldn't be able to search the web for an online coupon or a special deal. They've arrived and they're coming in. Discounts should not be available OR honored when shown on a Smartphone.
Sell Above the Floor. Establish a floor, or a minimum ticket price that you and your entire team agree not to fall below. As I said earlier, the top theme parks do not allow their one-day ticket to be discounted publicly. That said, there are thousands of reseller agreements out there which allow third-party resellers to move additional product without sacrificing the bottom line and your financial success. Whenever you can make an agreement with a reseller to sell your admission products, you are expanding your exposure-a win, win. But the pricing structure must be a win, win as well. These parks do this by establishing a minimum price (the floor) that they all agree to not fall below. For example, if a one-day ticket to the Hollywood Studios at Walt Disney World was $99 and the floor for the one-day, one park ticket was $79, the reseller commission would be around $20 per ticket. If the goal is to elevate the average ticket price, then reseller agreements, promotions, and special offers must adhere the floor. This keeps your Average Ticket Price on track and headed for higher ground.
It's always better to set prices in a manner that may drive a few less visitors but for a higher average ticket price. Like carpet, doing so keeps you atop the pile.
Have a great week!
"Too many people today know the price of everything and the value of nothing."
- Ann Landers