Inflation and its impact on the economy
Inflation is currently confronting many companies with complex economic challenges. Increasing operating costs suggest a price increase, but simple cost-plus pricing does not do justice to market complexity and customer behavior. It involves risks, as it only takes into account an internal perspective. In particular, it should be noted that the real costs of skiing in Austria — after taking wage increases into account — rose by around 7% last year, compared with an increase in the collective wage index (TFLI) in Austria of 3.06%.
The dilemma of ski areas
Ski resorts are faced with the problem that they can barely escape rising operating costs. Higher wages, energy costs and maintenance costs are forcing operators to think about price increases. But this approach is deceptive: Not all customers are able or willing to accept higher prices, which puts operators in an even more difficult position and potentially leads to a decline in customer numbers. There is a risk that a larger part of the market will disappear at some point. A sophisticated pricing strategy is required to ensure customer loyalty and financial stability.
The added value of dynamic pricing
Dynamic pricing offers a convincing solution here. It is not based on ski ticket prices, which are increased across the board, but on an intelligent and flexible adjustment of ticket prices based on expected and actual demand. This approach makes it possible to optimally take into account the different willingness of customers to pay. On days with optimal conditions, when demand and therefore the value of the product is high, it is possible to increase prices substantially in some cases without observing a negative demand effect. On the other hand, moderate risk-taking prices in the form of early bookings or generally lower demand help to make better use of investments.
Benefits of implementing dynamic pricing
Dynamic pricing is more than just a response to inflation — it is a sustainable strategy that adapts to changing market conditions and enables efficient pricing in ski resorts. The underlying algorithms and data sources for this pricing method are complex and take into account a wide range of data, including historical transaction data, weather conditions and customer booking behavior, and much more. This not only leads to more efficient pricing, but also to greater acceptance among guests, as they experience a pricing structure that they feel is based on value and equity. Customers therefore have a significant influence on pricing, based on their own price-performance ratio.
Adaptability and efficiency through dynamic pricing
Dynamic pricing makes it possible to react flexibly to unforeseeable events and to ensure economic success. In the event of sudden changes in demand, such as due to changes in weather, it allows a quick and effective price adjustment. The aim is to set an optimal price on a daily basis that maximizes both customer value and revenue.
Conclusion and outlook
Dynamic pricing makes it possible to offset the financial pressure of inflation without sacrificing price accessibility. It is a dynamic, data-driven balancing act that requires a fine balance between cost recovery and market demand. When implemented correctly, dynamic pricing can significantly increase profitability without the risk of selling yourself out of the market. An exclusively internal perspective is risky because it does not take into account market reactions and customer demand.
Working with dynamic pricing opens up a wide range of opportunities to achieve competitive advantages and respond to challenges in a dynamic market environment. We invite you to a non-binding initial consultation to discuss the benefits for your ski area through dynamic pricing.
In the next article in our series “The art of price optimization in times of high inflation,” we analyse the value of a ski day and the buying behavior of ski guests.
Contact us nowto learn how dynamic pricing can help you gain competitive advantages.
Written by Reto Trachsel and Jonas Meuli in collaboration with co-author Veronika Büchi
