by Seth BUTERA July 27, 2021
As a tour operator, you know that your pricing strategy is key to running a successful business. An effective pricing strategy will help you drive more bookings and run a profitable, sustainable business — and a poor one can do just the opposite.
If your tours are priced too high, you might be pushing guests toward your competitors. But if they’re priced too low, you might be on the verge of breaking even. Neither scenario is ideal.
We understand that figuring out the right price for your tours and experiences can be tricky. That’s why we’re breaking down the process for you.
In this post, we’re sharing our top tour pricing tips to help you nail down the best pricing strategy for your company.
A tour pricing strategy is a method you use to price your tours. Overall, this strategy should be based on your operating costs, market conditions, local competitors, and your desired profit margin.
Tour operators might use a variety of strategies to price their tours. Here are five of the most popular:
Pricing your tours and experiences might take some trial and error. Here are a few tips to help you lock in a solid pricing strategy that’ll increase your bookings.
Identify your operating costs; Your operating costs will determine the absolute minimum you should be pricing your tours. These will include your fixed costs (rent, administrative costs, business software, equipment storage) and variable costs (wages for guides, cost of fuel, meals during tours, commissions).
Conduct market research; It’s important to research your market to see what competitors are charging for their tours. You want your prices to be able to compete with similar tour offerings in your region. This will also give you an idea of what customers are used to paying for comparable tours and experiences.
Adjust pricing depending on demand; Many tour operators adjust their tour pricing based on demand. You might price high during the holidays and price down during the slow season.
Mark-up vs. mark-down pricing strategy; A mark-up pricing strategy ensures you’re making a steeper profit on every sale compared to the mark-down strategy, where you’re using a lower price to attract a higher quantity of bookings.
You might use the mark-up strategy during holidays when demand is high, and upcharges are common. On the other hand, the mark-down strategy would be a way to draw in more bookings during slower months.
Be mindful about discounts; Discounted tours help bring in more bookings during slow seasons, but they’re also an easy way to reduce your profitability. If you offer your tours at a discount too often, guests will start expecting them. They may refuse or become hesitant to buy your tours at the regular price, which would make it harder for you to go back to charging your normal rates.
Know that your pricing probably won’t be fixed; Your pricing will likely fluctuate with the market. Even if you feel you’ve found the ideal prices for your tours, you should always keep tabs on your competitor’s prices and overall market conditions. You want to make sure your prices remain relevant over time.