Pricing your tour or activity is critical to attracting the right audience and ensuring you are profitable in a highly competitive landscape. But having the best price isn’t necessarily the lowest price, it’s about understanding your customers, the competition, and the ups and downs of demand. This workshop dives into pricing strategies and key pricing techniques that will help you develop the best pricing for your tour or activity taking into account the competition, customers, fixed and variable costs, marketing, and distribution.

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Our topic today:
Get Your Pricing &
Profits Right!

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Lukas C. C. Hempel
Founder & Managing Director

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Europe‘s leading all-in-one technology for activity providers

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Europe‘s leading all-in-one technology for activity providers
More than
6000
customers
Based in
Berlin
More than
90
employees

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United in one big vision...
A world where
tours and activities
are delivered in the same way
as flights & hotels today.

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...and a strong European mission!
The leading
infrastructure
for tours & activities
in Europe.

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Connecting demand with supply since 2014
Supply
Activity Providers
Demand
End Customers
Marketplaces
OTAs
Travel Agencies
Distributors

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Connecting demand with supply since 2014
Booking Administration Marketing

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Tours & activities – a rapidly growing market
Flights LeisureAccommodation
754 bn USD
Market Size
550 bn USD
Market Size
129 bn USD
Market Size
Car Rentals
44 bn USD
Market Size
12 %
growth
p.a.!

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But first…
How does the “common”
business model of t&a
providers look like?
€

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The “common” business model of tour & activity providers
Fix. Costs Revenue
?Var. Costs
Profit?
Loss?
?

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The “common” business model of tour & activity providers
Profit/Loss = Revenue - Costs

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The “common” business model of tour & activity providers
Profit/Loss = Revenue - Costs
Profit/Loss = {#SoldTickets x Price} - Costs

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The “common” business model of tour & activity providers
Profit/Loss = Revenue - Costs
Profit/Loss = {#SoldTickets x Price} - Costs
Not always predictable
or cost-intensive
marketing necessary

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The “common” business model of tour & activity providers
Profit/Loss = Revenue - Costs
Profit/Loss = {#SoldTickets x Price} - Costs
Not always predictable
or cost-intensive
marketing necessary
Mainly
fix-costs

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The “common” business model of tour & activity providers
Profit/Loss = Revenue - Costs
Profit/Loss = {#SoldTickets x Price} - Costs
Not always predictable
or cost-intensive
marketing necessary
Mainly
fix-costs
???

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The “common” business model of tours & activities providers
Profit/Loss = {#SoldTickets x Price} - Costs
Can you push your revenue through a
specific pricing strategy?
Profit/Loss = Revenue - Costs

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YES!
How can you maximize
your profit with pricing
strategies?

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How can you maximize your profit with pricing strategies?
Standard
pricing
Seasonal
pricing
Weekday
pricing

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How can you maximize your profit with pricing strategies?
Standard
pricing
Seasonal
pricing
Weekday
pricing
But: Any other strategies possible?

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Pricing strategies in the two biggest tourism markets
Flights Hotels
Identical Challenges:
High fixed costs
Unpredicatble
utilization

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Example flight market: The “kings of pricing strategies”
Flights
Yield Management

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The average customer – the normal booking experience
Inspiration
Research Purchase
Anticipation
Loyality

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The average customer – the normal booking experience
Inspiration
Research Purchase
Anticipation
Loyality
Budget Irrational
Emotional
Price sensitive Price sensitive

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How can you maximize your profit with pricing strategies?
So what can we learn and
adopt from the other two
markets and the normal
booking experience?

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In General: Sell online!

27. 27How to maximize your profit with pricing strategies
Upselling
1

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Your customer wants
a special view?
Offer special ticket rates,
e.g. a seat next to the pilot
Upsell your ticket!

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Upsell again on site!
There a tons of products
you can sell on site!
Your customer wants
a special souvenir?

30. 30How to maximize your profit with pricing strategies
Upselling
1

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Anchor Pricing
2
How to maximize your profit with pricing strategies

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Anchor pricing is the tendency to
rely on the first price as “anchor”
during the booking process:
Premium Quad Tour: 89 €
Regular Quad Tour: 49 €
The lower priced regular tour
seems like good deal!
Set a price anchor!

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Anchor Pricing
2
How to maximize your profit with pricing strategies

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Higher incidental prices
3
How to maximize your profit with pricing strategies

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Higher incidental prices as anchor
Just showing – even to your
experience unrelated - higher
prices works as a higher anchor.
Show related experiences that
are more expensive.
Show any higher price!

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Higher incidental prices
3
How to maximize your profit with pricing strategies

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Charm pricing
4
How to maximize your profit with pricing strategies

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All that matters is what's before the comma!
We all know it from the
supermarket:
9,99 € or 9,95€
And it works since decades!

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All that matters is what's before the comma!
price
conversion
rate
Increase %
0.99 3.06%
1.18%
1 1.88%
2.99 3.44%
1.33%
3 2.11%
4.99 4.67%
0.83%
5 3.84%
5.99 1.56%
0.14%
6 1.42%
Source:http://blog.gumroad.com/post/64417917582/a-penny-saved-
psychological-pricing
We all know it from the
supermarket:
9,99 € or 9,95€
And it works since decades!

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Charm pricing
4
How to maximize your profit with pricing strategies

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Product vs. Price –
what to show first?
5
How to maximize your profit with pricing strategies

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Product vs. Price – what to show first?
Product
first
Price
first
= consumer decides
based on
quality
= consumer decides
based on
economic value
?

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Product vs. Price –
what to show first?
5
How to maximize your profit with pricing strategies

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From high to low
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How to maximize your profit with pricing strategies

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Customers view on the relationship between price and quality
Price
Quality
Anchor Price

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From high to low
6
How to maximize your profit with pricing strategies

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Offer a decoy
7
How to maximize your profit with pricing strategies

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Offer a decoy – two ways to show your products
Activity 1
Combo Ticket
Activity 1 + 2
Activity 2
- CANNOT BE BOOKED -
69 €
149 €
129 €

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Offer a decoy – two ways to show your products
Activity 1
Combo Ticket
Activity 1 + 2
Activity 2
- CANNOT BE BOOKED -
69 €
149 €
129 €
Activity 1
Combo Ticket
Activity 1 + 2
Activity 2
69 €
149 €
129 €

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Offer a decoy – two ways to show your products
Activity 1
Combo Ticket
Activity 1 + 2
Activity 2
- CANNOT BE BOOKED -
69 €
149 €
129 €
Activity 1
Combo Ticket
Activity 1 + 2
Activity 2
69 €
149 €
129 €
61 %
39 %
12 %
74 %
4 %

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Offer a decoy – two ways to show your products
Activity 1
Combo Ticket
Activity 1 + 2
In average we see approx. 43 % increase in
revenue by just displaying „decoys“
Activity 2
- CANNOT BE BOOKED -
69 €
149 €
129 €
Activity 1
Combo Ticket
Activity 1 + 2
Activity 2
69 €
149 €
129 €
61 %
39 %
12 %
74 %
4 %

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Offer a decoy
7
How to maximize your profit with pricing strategies

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Discounts
8
How to maximize your profit with pricing strategies

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The Golden Rule of discounting
Discount
with care!

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Discounts de-value your brand!
But: Offer early bird pricing to encourage pre-purchase.
Competition
on quality
Competition
on price
Don‘t discount! Discount possible!

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Rule of 100
vs.% €
Price < 100 €,
e.g. 10% discount
Price > 100 €
e.g. 50€ discount

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Discounts
8
How to maximize your profit with pricing strategies

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How can you maximize your profit with pricing strategies?
1
Anchor Pricing2
Upselling
3
Higher incidental
prices
5
Product vs. Price –
what to show first?
4 Charm Pricing
6From high to low
7Offer a decoy
8Discounts

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The big players has already changed their pricing strategy…

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… but what about the other 99.99%?
How can every tour &
activity provider become a
pricing strategy master?

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How can every provider become a pricing strategy master?
Use a professional booking system to optimize
your pricing and maximize your profit!
Software
Success

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Continue the discussion
at our booth…
Question?
Raise your
hand!
Lukas C. C. Hempel
Founder & Managing Director