Of the many zoos and aquariums we work with each year, we find that for nearly all, the front gate is the top revenue generator. Clearly, admission pricing is crucial to the bottom line.
A day at the zoo for a family of four can cost well over $100 in many places. Not cheap by most family’s standards. So how do we navigate that fine line of maximizing our revenues without alienating potential visitors? It’s an important question, and there’s no doubt that admission pricing is a tricky business.
We find that most of our clients use one of two pricing strategies:
- Flat pricing – an unchanging price year-round;
- Seasonal pricing – one price during the high season, and a lower price in the off-season.
If we assume that flat pricing is the status quo, seasonal pricing is then an effort to align the cost of a visit with the demand for the product—in this case, a day at the zoo or aquarium. That demand can change radically based on a lot of factors, weather being the primary one.
Within the industry, we’re starting to see a third option creep into view. While it’s definitely not a strategy that’s going to work for everyone, it is new and exciting, and worthy of our consideration. It’s a strategy long-used by airlines and hotels, but not yet commonplace in our vertical: dynamic (or demand-based) pricing. Dynamic pricing is the logical next step in the effort to align cost with demand.
Using years of historical visitor, weather and usage data and combining it with other factors (e.g. special events, holidays and new exhibit openings), an algorithm is developed that determines the statistically optimized price point on any given day. This flexibility allows zoos and aquariums to find the pricing “sweet spot” that accomplishes multiple goals: it maximizes revenue, controls crowds, ensures accessibility, and keeps visitors happy.
At a dynamically priced zoo or aquarium, the price of admission can (and does) change from day to day. Admission on a Saturday in April can be slightly more than a Tuesday the following week, however both of those admissions would be more than a Sunday in February. Spring break? Higher price. Quiet fall day? Lower price.
What are the benefits of dynamic pricing? Hopefully there are several. Obviously and perhaps most importantly is the financial benefit. But there are others. Dynamic pricing has the added benefit of controlling another huge factor in the guest experience: crowds. Higher prices have the effect of suppressing attendance, so that a 70-degree day in April doesn’t mean your zoo will suddenly be 50% over capacity. Until we learn to control the weather, pricing controls give us a good way to maximize revenue and ensure that no one has a bad time because the zoo is too crowded.
Families on a tight budget can enjoy a zoo and/or aquarium visit, but will perhaps choose to schedule their visit far in advance, or on a day with lower demand. In this way, dynamic pricing offers the customer more control in choosing the experience they want at the price they’re willing to pay.
We don’t have to look outside of our industry to find an example of dynamic pricing in action. The Indianapolis Zoo was the first AZA institution to put dynamic pricing into place, and have experienced huge revenue growth since doing so—they reportedly grew admissions revenue by a huge amount in their first year, at improved guest satisfaction surveys at the same time!
As we mentioned earlier, dynamic pricing systems aren’t going to be right for every zoo or aquarium, but they do represent a paradigm shift that we welcome: an effort to utilize the tremendous data resources that are available to us in the service of maximizing our institutions.
For those of us who would never consider it, there’s still a valuable takeaway: if you’re not doing everything you can to capture and record data about your constituents, you should be. While dynamic pricing may not be “what’s next” at your zoo, it’s a safe bet that whatever’s around the corner will rely not on what you think, but on what you can prove through your data.
If you’re interested in learning more about dynamic pricing, drop us a line here and we’ll get back in touch with you.