Dynamic Pricing In The Leisure Industry

In today’s competitive landscape, leisure businesses are constantly exploring ways to enhance customer experiences and drive revenue.

Digital signage is being adopted right across the sector by theme parks, holiday parks, cinemas, museums, theatres and stadiums for leisure marketing. It is being used to promote different offerings, forthcoming events, assist with wayfinding, give information and sell tickets.

However, there’s an opportunity that digital signage offers which most leisure businesses are currently failing to capitalise on: on-site dynamic pricing.

In this article, we explore how leisure businesses can adopt dynamic pricing for their concessions stands and/or food/drink counters.

Understanding Dynamic Pricing

Dynamic pricing, also known as surge pricing or demand-based pricing, is a strategy where prices for products or services are adjusted in real-time based on market conditions. Unlike traditional pricing models that maintain static prices, dynamic pricing enables businesses to optimise revenue by adapting due to changes in demand and other relevant factors. These factors can be related to supply and demand, competitor pricing, and/or customer behaviour.

This pricing strategy is far from new, and has been used by airline and hotel industries on their websites for years. However, with technological developments, it is now possible to use it in a ‘bricks and mortar’ context.

Utilising Digital Signage for Dynamic Pricing

Many leisure businesses are aware that digital signage and electronic point of sale (EPOS) systems can be integrated, enabling prices displayed on digital menu boards and kiosks to be updated automatically, based on predefined rules and triggers.

These triggers can be simple price updates as and when they are made within the EPOS, or they can be automatic, for example with prices changing (or items being removed) depending on stock levels.

However, this doesn’t have to be the only data source that digital signage is integrated with. Specialist software developers can integrate data from various sources, including weather forecasts, and calendars.

Prices for cold drinks and ice creams can be programmed to increase by an appropriate amount when temperatures are forecasted to exceed a certain temperature, and then revert back when temperatures reduce. When temperatures are forecast to drop below a certain point, the prices for hot drinks can automatically be increased, and revert back when the weather is warmer.

Other data sources could be used such as a calendar, with prices increasing automatically on bank holidays and during school holidays. Historical data could also be used to indicate periods of changing demand for different types of product/service, and prices increased to take advantage of these fluctuations.

Alternatively, digital displays can be integrated with the sales of entrance tickets, so when a site is at its busiest, and peak demand is likely, prices can be adjusted to capitalise on the increased footfall. Similarly, when the site is quiet and demand is low, prices can be adjusted for better stock management, and promotions shown to drive up demand and maximise the available revenue among the customers there are.

Pricing changes don’t need to just appear on digital menu boards either. The displays outside of the concessions stands or food/drink outlets, which are used to drive traffic to them can also have the prices displayed on them automatically updated too. Content showing price promotions, such as buy two cold drinks get one free, can also be dynamically controlled and removed automatically when demand is likely to be highest.

Ethics of dynamic pricing

There is huge potential for dynamic pricing in the leisure industry, however it is important to tread carefully.

Optimising revenue and profitability must never overshadow customer experience and fairness, so there is a careful balance to be struck.

Dynamic pricing practices must be fair, so prices don’t increase too much, and transparent so customers are aware that minor price fluctuations may occur and why.

Safeguards should also be introduced to ensure that there are never sudden spikes in prices that catch customers off-guard. Prices should never be drastically different on subsequent visits, or customer trust and loyalty will be lost and they’ll be unlikely to return to your leisure business. If customers leave your premises feeling ‘ripped off’, the reputation of your leisure business is also likely to suffer.

Keeping the prices of healthier options (e.g. water, fresh fruit) constant can be a good way to ensure that there are always options that remain affordable to all customers, no matter what their budget is. From a corporate social responsibility perspective, it also that means that your establishment is shown to be taking positive steps to encourage customers to make healthier choices.

Conclusion

By leveraging software development to automate price adjustments and integrating data from various sources such as weather forecasts, leisure businesses can optimise pricing decisions to maximise revenue and improve operations.

Whilst dynamic pricing is in its infancy in leisure marketing, adoption seems inevitable as the technological landscape continues to evolve. Those leisure businesses embracing the benefits that software development and digital signage offer will undoubtedly stay ahead of the curve.

NB: this article was written with assistance from AI technology.