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Dynamic Pricing v Variable Pricing

Is Dynamic Pricing really the future, as many would have us believe, or is it just another way of selling technology that’s not needed in this industry?
Reading Time: 2 minutes
Reading Time: 2 minutes

Much is being written at the moment regarding Dynamic Pricing for visitor attractions. The key drivers seem to be the potential to offer cheaper tickets at less busy times or even ‘last minute’ prices if ticket sales are down. How do we know it’s less busy? Simples – look at the number of tickets sold for that day/session. It’s not rocket science and doesn’t need much in the way of computer intelligence/involvement to work it out. I think it’s also fair to say that most visitor attractions will generally know their ‘best’ and ‘worst’ days. Usually worked out over several months and/or what it was like last time we held this type of event. We can also take weather conditions into account by looking up at the sky or reading a weather forecast!

If, as a result of these findings, there is a decision to reduce prices to encourage people to book on the less popular sessions is that really Dynamic Pricing? In my view it’s more about Variable Pricing and adjusting prices to meet local situations, bookings, staff availability, etc. For example, is an ‘early bird’ discount Variable Pricing or Dynamic Pricing? I would suggest that it’s only variable pricing, in the same way that the price may vary, the closer you get to the event.

I guess the $64,000 question is “Do you want the computer to adjust the prices based upon some mathematical equations or other algorithms or do you want to be in control of the business”?

It would appear that there is a great movement to push people down the route of ‘computer generated pricing’ rather than ‘variable pricing’, where the buzz words for ‘computer generated pricing is ‘dynamic pricing’!

I make no secret of the fact that I feel the move to Dynamic Pricing is really an alternative way of implementing Variable Pricing. You could argue that this is because Merlin has had Variable Pricing now for over 15 years and therefore I’m biased. That could be a relevant view but in all those years what I’ve found is the users of our system have had all the control and flexibility they have needed to control both visitor numbers and ticket prices. In addition, and more importantly, they have never been criticised for not being transparent with their pricing model nor have they had massive negative feedback on social media for ‘ripping off’ their customers.

Does Dynamic Pricing really work? Ask all those who tried to book tickets for the Formula 1 race at Silverstone last year, where in many cases ticket prices were actually rising as people waited on the internet to pay – in some cases by as much as 50%! It’s fair to say that social media was full of condemnation for this practice. Is that how you want to treat your customers?

So, in conclusion, is Dynamic Pricing really the future, as many would have us believe, or is it just another way of selling technology that’s not needed in this industry? I think you can guess my answer!

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