Pricing Strategy

NAAU provides a more rigorous, mathematical approach to identify an optimal pricing strategy that will maximize a VSO’s admission-related revenues.  These same indices will also identify the chronology of opportunities for a VSO to increase its admission price without taking a toll on its overall market potential.

The price indices model is intended to reveal insights into the market’s price sensitivities.  The price indices model includes several “stand-alone” summary metrics that will provide valuable indicators of a VSO’s admission-related revenue potential, including:

     

  • Price Premium: The “price premium” assessment compares the price of admission to a VSO with a price determined by an analysis of competitors (prevailing benchmark price). This metric is a key indicator of relative brand strength, and may suggest opportunities to leverage a VSO’s brand to increase visitation, repeat visitation, membership, and perceived value.

 

  • Reservation Price (“Price Threshold”):  The “reservation price” assessment indicates the maximum amount that the market is willing to pay for admission to a VSO. This assessment informs the development of a demand curve that may indicate opportunities in the market to acquire new visitation, as well as opportunities to convert existing visitors to more profitable admission categories, including membership.

 

  • Percent Good Value: The “percent good value” assessment indicates how a VSO’s visitors view admission prices in terms of their perceived “value for cost.”  Generally speaking, the percent good value assessment will confirm the market’s acceptance of a pricing strategy based on the reservation price.

 

  • Price Elasticity of Demand: The “price elasticity of demand” assessment indicates the impact of a change in the admission pricing strategy on the demand for admission.  Essentially, this assessment quantifies the number of admissions sold to changes in price.

 

  • Optimal Price:  The “optimal price” is the price that maximizes the contribution to a VSO’s earned income after accounting for how the quantity of visitation changes with price.

 

Collectively, these assessments and metrics create the data points that enable IMPACTS to model admission pricing indices over time.

 

The findings derived from this process will support one of three conclusions:

  1. The findings confirm a VSO’s current admission pricing strategy.
  2. The findings indicate the opportunity for a VSO to increase its admission price (and/or accelerate the schedule of pricing increases in successive years) so as to increase admission-related revenues.
  3. The findings indicate that the market will not support a VSO’s current admission pricing strategy, and the strategy risks both volume of visitation and earned revenues.