I’m conflicted on this one.
On one hand, I teach pricing strategy in some of my courses.
The explicit strategic goal: increase revenue and profits with aggressive pricing tactics.
On the other hand, I always feel sorry for “average” parents who get creamed financially when they take their kids to a ball game or amusement park.
Based on recent announcements, Disney – Mickey’s parent company – is rolling some pricing tactics to fatten Mickey’s wallet and flatten your’s …
First, Disney hiked rates for its annual passes, putting some prices above $1,000 for the first time.
The company says the price hike “will help us manage strong demand and continue to deliver a world-class experience,”
The economics: basic supply and demand is at work.
Some folks whine “”It is starting to be only for the wealthy and that is not what Walt would have wanted.”
But, crowds are big, demand for annual (“all you can eat”)passes has been skyrocketing and plenty of folks are willing to pay more.
Second, according to CNBC, Disney is considering “Uber-style ‘surge pricing’ for its theme parks”.
You know, setting sky-high prices when demand is high (think 4th of July weekend) and lower prices on late Fall Tuesdays.
That’s not uncommon.
Airlines, hotels, restaurants, and car rental companies have done it for years.
Some sports teams have started charging more for weekend games … especially for stadium-filling games against arch rivals (think, Yankees vs. Red Sox).
The pricing tactic is called “demand management” … using price as a way of boosting profits when capacity is constrained – i.e. the park is likely to be bursting at the seams – by charging higher prices that skim the top of the market …. and by increasing capacity utilization during low demand periods – i.e. when there are empty seats – by lowering prices to stimulate demand with value-conscious customers.
Maybe profit-oriented Mickey should consider “dynamic pricing”.
You know, boosting (or cutting) ticket prices on-the-fly as ticket sales for a particular day as ticket sales exceed or fall short of expectations.
For example, if the weather turns rainy for a summer weekend, cut prices at the last minute to fill the park.
Historical note: Coke got creamed when it tried – in Latin America – to dynamically price its vending machines. When the machine was full of Coke, the machine charged a “regular” price …. when down to the last couple of cans, the price was automatically jacked up. Ouch.
That’s what the airlines do every minute of every day, Mickey.
Go for it.