How can you use pricing to encourage customer behavior in Hospitality?

1 Value-based pricing

Value-based pricing is a strategy that aligns your prices with the perceived value of your services or products in the eyes of your customers. Instead of basing your prices on your costs or competitors, you focus on the benefits and outcomes that your customers seek and are willing to pay for. For example, you can charge more for a room with a view, a table near the window, or a personalized package. Value-based pricing can help you increase your revenue, differentiate your brand, and create loyal customers who appreciate your value proposition.

2 Dynamic pricing

Dynamic pricing is a strategy that adjusts your prices according to the changes in demand and supply in the market. By using data and analytics, you can monitor the fluctuations in demand, occupancy, seasonality, events, and other factors that affect your pricing. For example, you can increase your prices when demand is high, such as during peak seasons, weekends, or holidays, and lower them when demand is low, such as during weekdays, off-seasons, or low periods. Dynamic pricing can help you optimize your occupancy, revenue, and profitability, and respond to the market conditions in real time.

3 Psychological pricing

Psychological pricing is a strategy that uses the principles of human psychology and behavior to influence your customers' perception of your prices and value. By applying various techniques, such as anchoring, framing, decoy, scarcity, or bundling, you can make your prices more appealing, attractive, and persuasive to your customers. For example, you can use odd numbers, such as $99 instead of $100, to create the illusion of a lower price, or offer a third option that makes the other two look more favorable, such as a standard, deluxe, and premium room. Psychological pricing can help you increase your sales, conversions, and customer satisfaction, and create a competitive edge.

4 Customer segmentation pricing

Customer segmentation pricing is a strategy that offers different prices to different segments of your customers based on their characteristics, preferences, and behaviors. By using customer data and insights, you can identify and target the most profitable segments of your market, and tailor your prices to their needs, wants, and expectations. For example, you can offer discounts or incentives to loyal customers, repeat customers, or referrals, or charge more to business customers, last-minute customers, or special-occasion customers. Customer segmentation pricing can help you attract and retain more customers, increase your customer loyalty and retention, and maximize your revenue potential.

5 Value-added pricing

Value-added pricing is a strategy that adds extra features, benefits, or services to your core offering to increase its value and justify a higher price. Instead of lowering your prices to compete with lower-priced competitors, you enhance your offering to create more value for your customers and differentiate yourself from the competition. For example, you can offer free breakfast, Wi-Fi, parking, or shuttle service to your hotel guests, or complimentary drinks, appetizers, or desserts to your restaurant customers. Value-added pricing can help you increase your perceived value, customer satisfaction, and word-of-mouth, and reduce your price sensitivity and elasticity.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?