In the Trenches: Giving In to Peer Pricing Pressure – Small Business Center
Cranky Concierge doesn’t price like traditional travel agents, but I’ve been rethinking whether that’s good or not.
Cranky on the Web – Pricing Changes
In the Trenches: Giving In to Peer Pricing Pressure – Small Business Center
Cranky Concierge doesn’t price like traditional travel agents, but I’ve been rethinking whether that’s good or not.
11 comments on “Cranky on the Web – Pricing Changes”
Sounds like a classic market segmentation issue. If only you had some sort of post-graduate education that taught you how to master the administration of a business…
Interesting. Have you looked at Pragmatic Marketing and value based pricing? Marketing as a discipline has a few frameworks for determining pricing, you shouldn’t have to reinvent the wheel.
Matt – We tried to reinvent the wheel initially but now we’re rethinking. I still need to do a lot of analysis to make sure that it would work well for us.
Since the cost of managing two, three, or four tickets isn’t much more than the cost of managing one, you might consider having a sort of “companion fare,” where there’s still a per-person cost for each traveler but a group of 4 travelers costs less than 4 individual tickets would.
Tonei – That’s actually how we handle award travel today, but it does get challenging. We often have groups of people who may travel one way together and not the other way. So we would probably only be able to do the discount if people traveled together. Then it gets complex again, and I’m trying to reduce complexity. It’s an interesting problem.
How do the travel agencies that charge by ticket define ticket (now that most everything is e-ticket)? Is it one ticket number with a maximum of four flight coupons?
PF – I can’t say I know that they all handle it the same way, but as far as I know, conjuncted tickets count as one. (Meaning, any attempt to put on one ticket that needs more than 4 coupons would count as one for charging purposes.)
You could also just have a “per family” charge, which would include two parents and unlimited kids traveling on the same itinerary.
For the record: I have used you for ticketing and monitoring, and in various-sized groups. I’m perfectly happy with your current set-up.
I’m a college student studying economics (who also happens to love the airline Industry), and I can see the frustration, especially when people don’t realize that they are comparing apples to oranges. Rather than a per person fee, I think that in your case, it could make sense to have a graduated pricing system where the marginal cost to the consumer is less for every additional person since you said in your article that your cost for handling additional customers on an itinerary is relatively small. Overall, this helps ensure a more efficient operation as you can serve your customers closer to the point at which their marginal benefit equals their marginal cost.
Matthew – Thanks for this. I’ve thought about that, but it’s a balance between ideal pricing and simplicity. The problem is you often have people who travel together one way and then separate on the return. So would we still extend the discounted rate or not? It’s hard to explain that to people. It’s something we do now when we say 4 people traveling together on the same itinerary. It creates confusion and anger when we tell people it’s more than they think.