Skip to primary navigation Skip to content Skip to footer

Ways to Implement Pricing & Upsell Strategies

Last updated on March 9, 2020
10 minute read
Categories

Skill Level

Intermediate, Advanced
Actions

Pricing strategies for tour operators often involve a balance between marketing goals and financial analysis. Whether you’re just starting out as a tour operator and wondering what to charge for activities or you’ve been on the scene for a while but need to reevaluate costs, setting prices for experiences definitely requires some careful planning.

There are many elements to consider when it comes to picking the perfect price for a tour. Pricing is all about finding that sweet spot — the cost should set you apart from competitors, maintain a healthy profit margin, and be attainable for customers. When all of these aspects come together, the outcome is good for everyone.

Determining how much to charge for tours and activities may seem like a daunting task, but with so many different pricing strategies, you’re sure to find one (or several!) that works for your business. This guide will cover what you need to consider before choosing a price and how to upsell your tours and activities using different pricing strategies throughout the year.

Analyze Your Costs

Trying to revamp your pricing strategy? The best place to start is to look at operating costs. Operating costs consist of two main categories: fixed costs and variable costs. 

Fixed costs cover items like administrative fees, rent, annual costs, or costs associated with things like storing equipment and paying for insurance. These are the costs that occur every year, independent of the number of tours you run.

Variable costs are the costs a business incurs based on the number of tours and activities you run, and they can change year to year. These might include the cost of fuel, equipment maintenance needs, the commission paid to resellers, and any marketing efforts.

Calculate both of these costs to get an idea of how much income is needed to cover them but also to start making a profit! Begin by taking a look at previous years to get an idea of variable costs. For businesses just starting out, do some research into what those variable costs might include. For example, if you just bought a brand-new ATV for off-road tours, chances are it likely won’t need maintenance any time soon, but it’s a good idea to cushion the budget in the event of unforeseen repairs.

By determining a breakeven point, you can calculate the number of bookings needed to ensure you don’t incur any losses. This is a great starting point for choosing pricing strategies further down the line.

Consider Your Profit Margin

Now that you know how many bookings are needed on each tour to break even, decide how much profit you want to make on each tour. 

Does your tour offer considerable added value or are you promoting low-cost options? Offering a more luxury experience with inclusions like champagne or transportation to and from the tour can demand a higher price, especially if the added value sets your experience apart from those of your competition.

On the other hand, if competitors already operate an all-inclusive version of the same experience, opt for a low-cost alternative that offers no frills. Customers looking for more affordable experiences will view your business more favorably, leading to more bookings. It’s still okay to offer some extras, like beverages or transportation, but make them available as add-ons for an additional price.

Be sure to analyze the pricing of all of your area competitors, as well as the market price of your experience, to see how you can offer a better option while still making a profit. Also, consider the demand for your activity. Ask friends and family members how much they would be willing to pay for the activity to get an idea of what the average person would be willing to spend. 

Are your tours always selling out? If your business is somewhat unique or you’re the only operator in the area for a certain activity, there’s more flexibility to set a price since the demand is already there. However, if there is a lot of competition or your tours and activities aren’t filling up the way you want them to, it might be time to revamp your pricing strategy.

Pricing Strategies

Remember, you don’t have to stick to one price year-round. The tour and activity industry is always fluctuating, and prices should too. Use a combination of the following pricing strategies to offer the best prices all year.

Seasonal & Peak Pricing

Do you operate tours at a summer vacation destination that’s busy for a few months and then quieter during the rest of the year? Perhaps your most popular tours run around the holiday season and don’t tend to fill to capacity in the following months. Whatever your schedule, seasonal pricing helps to hit goals and fill tours. 

Travelers booking activities during peak seasons know to expect higher prices. It’s common to raise prices during the summer months, holiday season, school vacation weeks, local holidays and events, or any time of the year that your tours and activities see the most guests. On the flip side, lower your prices during the shoulder seasons, creating an incentive for people to book throughout the year, especially if they’re shopping for a deal.

Time of Day Pricing

The early bird gets the worm, or in the case of tours and activities, the best price! If your business operates all day, chances are there’s a busy time of day when resources are limited and demand is high. For example, escape rooms tend to book up during the evening and nighttime hours, while midday is a popular time for kayak rentals.

Make the most of your peak hours each day by raising your prices when demand is at its highest. Charge lower prices early in the morning or whenever tours are consistently less busy. Doing this will pull in the crowd that’s looking for a lower price while still snagging those customers coming during peak hours.

Day of Week Pricing

Similar to time of day pricing, day of week pricing operates under the assumption that your business sees some very busy days throughout the week (usually weekends) and some pretty quiet days as well. Raise prices on the weekends (or whenever it’s busiest) to take advantage of the high demand.

Discount Pricing

Everybody loves a great deal, so discount pricing offers an additional way to drive bookings. Offer a discount for large groups or corporate bookings on your website and turn those guests into repeat customers who bring friends and family for more tours. Tap into your digital marketing channels to promote other discounts and keep those bookings coming.

Last-Minute Pricing

Some travelers are planners while others fly by the seat of their pants and like to shop last-minute deals. Offering discounted last-minute prices is a great way to fill every last spot on your tour. This pricing strategy can be a little tricky, as it requires a lot of promotion and marketing through social media, email marketing, and other tactics to spread the word, but it can be very worthwhile when you find those last-minute guests and hit your capacity.

Packages

For guests who like an all-inclusive arrangement, packages can earn additional revenue on regularly scheduled tours. Sell a standard tour and offer an upgrade that includes lunch, transportation, your company logo t-shirt, and other bonuses. People still have the option to book the tour as is, but a package can bring in some extra revenue and appeal to guests who like everything planned out for them.

Ready to hit the ground running? Start by taking a look at your operating costs and profit goals to see where you could improve. No matter which pricing strategies you implement, creating varied pricing will help fill your tours and activities to capacity while satisfying guests who are shopping at every price point.

If you’re looking for additional ways to maximize profit, learn why you should include add-ons with your tour!

Related Guides

Skip to toolbar