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The power of Scientific Pricing.
How to make 35% more revenue?
Maximize your Revenue
Hospitality and Travel technology sol...
WHAT IS BEHAVIOURAL PRICING FOR HOTELS?
Behavioural Pricing is a form of price discrimination. The goal of price discrimin...
CONSUMERS PSYCHOLOGY
Adding Small Differences can Increase Similarity and Choice
$100 $100
Scenario 1
$100 $110
Scenario 2...
The Anchoring Effect
$300 $200
$100 $120
Should I be the
Anchor or
price lower?
12% increase in sale of $200 watch
as $300...
Weber’s Law of Just Noticeable Difference
$10
Per Gallon
$9.8
Per Gallon
$10.4
Per Gallon
$14
Per Gallon
30%
Should I incr...
Social is the King
$150
What is the right
price for my hotel room?
$150
Average Ratings 4 of 5 Average Ratings 3 of 5
Pric...
WHAT IS SCIENTIFIC PRICING?
Optimized Pricing
Business Analytics
Automation
WHAT IS SCIENTIFIC PRICING?
Optimized Pricing
OPTIMIZED PRICING
Price optimization is the use of mathematical analysis by a company to
determine how customers will resp...
WHAT IS SCIENTIFIC PRICING?
Business Analytics
BUSINESS ANALYTICS
Hotel Occupancy
What is your current booking pace?
60%
70%
50% 85%
40%
OCCUPANCY RATE
o Functions of th...
BUSINESS ANALYTICS
Competitive Benchmarking
Where are your rates positioned in the market?
BUSINESS ANALYTICS
Perceived Value
Average Ratings 4 of 5 Average Ratings 2.3 of 5
Price $17.99 Price $14.99
Restaurant 1 ...
BUSINESS ANALYTICS
Market Compression
WHAT IS SCIENTIFIC PRICING?
Automation
AUTOMATION
Competitive
benchmarking
And rate trends
Market
compression
indicators
User generated
reviews and ratings
Occup...
WHY SHOULD HOTELIERS WORK WITH SCIENTIFIC PRICING?
Would be process driven:
Which means that a revenue manager would consi...
Thank You
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The power of scientific pricing

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Discover how Scientific Pricing can help your make 35% more revenue for your hotel business in 2016.

Employing a scientific pricing methodology is the only reliable way to consistently determine optimum prices that will maximize your hotel’s revenue. This robust methodology is based on the principles of logic, economics and scalability.

Published in: Business
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The power of scientific pricing

  1. 1. The power of Scientific Pricing. How to make 35% more revenue? Maximize your Revenue Hospitality and Travel technology solutions
  2. 2. WHAT IS BEHAVIOURAL PRICING FOR HOTELS? Behavioural Pricing is a form of price discrimination. The goal of price discrimination is to maximize profits by adjusting the price that different customers pay based on data about the consumer. Price discrimination is common offline, such as the Museum of Modern Art charging adults $25 but students only $14. PRICE DISCRIMINATION
  3. 3. CONSUMERS PSYCHOLOGY Adding Small Differences can Increase Similarity and Choice $100 $100 Scenario 1 $100 $110 Scenario 2 46% People made a purchase 77% People made a purchase What does this mean for my hotel? $100 $100 What should be the price of my hotel room? HOTEL 1 HOTEL 2 MY HOTEL
  4. 4. The Anchoring Effect $300 $200 $100 $120 Should I be the Anchor or price lower? 12% increase in sale of $200 watch as $300 watch acted as an Anchor What does this mean for my hotel? HOTEL 1 HOTEL 2 MY HOTEL CONSUMERS PSYCHOLOGY
  5. 5. Weber’s Law of Just Noticeable Difference $10 Per Gallon $9.8 Per Gallon $10.4 Per Gallon $14 Per Gallon 30% Should I increase my price by 10% or 30% ? 20% Price Increase Price Increase Customers don’t notice an increase when the average point is less than 10% What does this mean for my hotel? HOTEL 1 HOTEL 2 MY HOTEL CONSUMERS PSYCHOLOGY
  6. 6. Social is the King $150 What is the right price for my hotel room? $150 Average Ratings 4 of 5 Average Ratings 3 of 5 Price $17.99 Price $14.99 1% point increase can increase rate by 15% What does this mean for my hotel? HOTEL 1 HOTEL 2 MY HOTEL CONSUMERS PSYCHOLOGY
  7. 7. WHAT IS SCIENTIFIC PRICING? Optimized Pricing Business Analytics Automation
  8. 8. WHAT IS SCIENTIFIC PRICING? Optimized Pricing
  9. 9. OPTIMIZED PRICING Price optimization is the use of mathematical analysis by a company to determine how customers will respond to different prices for its products and services through different channels. Amazon, one of the largest retailers that uses optimized pricing, changes its prices of its 15-20% of its inventory every 10 minutes on average. The company saw a 27.2% increase in sales from 2012 to 2013 and generated over $44bn in sales just last year. This resulted in Amazon being named one of the top 10 retailers in the US for the first time.
  10. 10. WHAT IS SCIENTIFIC PRICING? Business Analytics
  11. 11. BUSINESS ANALYTICS Hotel Occupancy What is your current booking pace? 60% 70% 50% 85% 40% OCCUPANCY RATE o Functions of the increased price model: a) increase supply b) temporarily intentionally reduce demand. o By offering more money to drivers, they were able to increase on- the-road supply of drivers by 70-80%, and more importantly eliminate two-thirds of the unfulfilled requests.
  12. 12. BUSINESS ANALYTICS Competitive Benchmarking Where are your rates positioned in the market?
  13. 13. BUSINESS ANALYTICS Perceived Value Average Ratings 4 of 5 Average Ratings 2.3 of 5 Price $17.99 Price $14.99 Restaurant 1 Restaurant 2 How does your hotel fare against the competition in value when prospective guests are making their hotel shortlists?
  14. 14. BUSINESS ANALYTICS Market Compression
  15. 15. WHAT IS SCIENTIFIC PRICING? Automation
  16. 16. AUTOMATION Competitive benchmarking And rate trends Market compression indicators User generated reviews and ratings Occupancy data from your PMS
  17. 17. WHY SHOULD HOTELIERS WORK WITH SCIENTIFIC PRICING? Would be process driven: Which means that a revenue manager would consistently follow the same process in determining the optimum price. Would be scalable: A revenue manager should be easily able to continually replicate the process and scale it up, irrespective of the number/ type of rooms in the property. Would be fast: The methodology can be applied at a speed which would match the pace of market movements. Market factors change rapidly, and if revenue managers aren’t fast enough, they will not be able to determine the right price in time to distribute those prices.
  18. 18. Thank You

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