This article explains what smart pricing is and what the benefits of this pricing strategy are.
Smart pricing, or dynamic pricing, is a pricing strategy that adjusts prices in real time based on various industry-specific factors such as:
- demand
- weather conditions
- peak and off-peak hours
- days of the week versus weekends
- time remaining before an event, etc.
Smart pricing is a pricing method already used in many industries, such as airlines, hotels and e-commerce. Gradually, smart pricing is also becoming the norm in the events and leisure sector.
This is because the events and leisure industry is driven by the same characteristics as airlines, hotels and e-commerce:
- Fluctuating demand
- Generally fixed quantities/fixed capacities
- Marginal cost of selling more tickets close to 0
The benefits of smart pricing
- Income maximisation: expected increase in income between 10 and 30%.
- Adaptation to demand fluctuations with real-time price changes
- Guaranteed early bookings and pre-sales as people tend to book 2x earlier with dynamic pricing. This helps to better anticipate event organisation and cash flow
- Increased online booking share by 10%. People are exposed to more complementary products in the booking flow, which increases revenue through cross-selling
- Improved online conversion rate
- Spreading demand over off-peak hours through encouraging prices, which can increase overall patronage by up to 10%. This impact is even greater because of COVID-19 and the reduced capacity
- Increased customer satisfaction when they know they are getting a better price because they book in advance
Find out more about smart pricing