Optimizing Visitor Attraction Entrance Prices to Fit Customer Psychological Thresholds
Case Study: Hospitality & Tourism
For many pricing research projects, regardless of industry, the key is to understand how customers evaluate decisions and make choices between competitive options.
With admissions totaling more than 460 million guests across 300+ theme and amusement parks, pricing represents a significant opportunity in the European attractions industry. However for this Pricing Solutions client, admission charges were simply a legacy of previous prices with annual increases resulting in what they charged the customer of today.
In recent years this award-winning UK family visitor attraction – providing a range of different offerings all under one entrance fee – had faced the issue of declining visitor volumes. The management team felt that their current pricing was creating a barrier for many potential customers and stopping them from visiting the attraction. Upon partnering with the client, Pricing Solutions UK used customer research to help the tourist attraction optimise revenue with a segmented pricing strategy.
The client wanted an understanding of customers’ pricing perceptions, how these might be impacting visitor volumes, and to be provided with evidence-based recommendations to direct their pricing decisions.
The management team were also aware of the concept of value-based pricing, but were unsure of how to apply it to their own situation. While some were convinced that certain visitors would be willing to pay more, others felt lower prices would drive increased volumes and better revenues.
Building a Solution that Fits
Pricing Solutions conducted pricing research to investigate the willingness to pay of over 1,000 respondents. By combining face-to-face and online survey techniques we reached a representative sample of target customers: a mix of those who knew the attraction and those who had not visited before.
Pricing Solutions then provided in-depth insights into how customers perceived the client’s offering, identifying their key value drivers and decision criteria compared with competitor attractions.
Pricing Solutions UK also explored the key phases of the buying process, including how customers researched prices, and when they decided to buy.
An important focus of the research was to use three different techniques to evaluate customer response. By using these numerous methods it was possible to validate an individual’s response, eliminating inconsistent answers and ensuring a significantly higher quality and accuracy of data.
As a result of the project, Pricing Solutions was able to design a pricing structure that enabled the client to offer differential pricing based on customer segments rather than a single price point.
We also confirmed a common B2C trend that visitors were highly sensitive to pricing around major psychological thresholds, such as £20, £25 and £30.
The client’s management team saw the benefits of this approach and quickly adopted the recommendations.
Four months down the line, the attraction is hitting its volume targets whilst raising average price. As a result they are delighted to be performing significantly above revenue forecasts.
Pricing Solutions is continuing to work with the client to refine the implementation and monitor performance of the pricing changes.
What’s the Pricing Solutions Difference?
After an initial investigation of consulting firms the client selected Pricing Solutions, based on our knowledge and experience of pricing research techniques – superior to many of the general marketing research agencies claiming to offer pricing research
In addition, Pricing Solutions has a proven track record of delivering clear and actionable pricing recommendations to improve revenues and profitability, rather than simply providing customers answers.