How to charge a Premium Price for your Tourism Experience
Profitability and sales margins are a worry for many tourism business owners, especially when you only have a certain number of tours seats, hire vehicles or beds to sell, or if you need a certain number of visitors through your doors to break-even.
One pricing strategy for tourism operators to grow their profitability is to offer their customers a premium priced experience in addition to their standard product offering.
In addition to growing profits and sales margins, there are three other benefits to offering premium priced product to your customers.
A premium experience usually leads to happier customers, and therefore are more likely to become raving fans and advocates of your experience!
There are customers for it!
In the classic sales and marketing book 80/20 Sales and Marketing, Perry Marshall shows that at any given price point, 20% of customers have the potential to spend four times the money of the remaining 80% of customers.
So if you have a 100 visitors to your tourism experience, based on this principle, 20 of these visitors will be willing to pay a premium for your tourism experience.
Work smarter, not harder
When a % of your existing customers choose to pay for a premium priced experience, you are making greater profits for often similar amounts of work.
So how do you offer a premium product offering in your tourism business?
First, you need to understand what motivates people to pay a premium price.
There are five key motivations of why people will pay a premium for an experience.
- Status reasons. Some people always identify as VIPs and always buy the best.
- Impress others. Some people like to be “seen” in a particular way or have bragging rights about an experience.
- Save time. Many people have limited time for their holiday and are therefore willing to pay good money to save time or get more out of their holiday experiences.
- Feel special. People will pay more to “feel” special, especially when compared to other visitors at the same experience.
- Niche Interest. People are increasingly travelling to indulge a hobby, and are willing to invest money in pursuing a passion. This could include learning a new skill (cooking, photography etc) or doing what they love (eg mountain biking, garden tours).
Case Studies of Premium Priced Tourism Experiences
Sounds good in theory, but how does it look in reality?
Here’s some inspiration with examples of different types of premium priced tourism products for a range of tourism experiences.
Access to you
As many of you may be the owner of your tourism business, the opportunity for one-on-one time with you as the owner for a tour is a special privilege people are happy to pay for.
Private Winery Tour and Tasting, Seppeltsfield Vineyard Cottage
In the Barossa, guests are offered the option to purchase a private vineyard tour during their stay with owner and vigneron Pete! And if you read their amazing TripAdvisor reviews, this tour is a highlight of many of their guests stay, and often a highlight of their Barossa visit!
Providing guests with an exclusive experience away from the general public is a fantastic premium priced product idea for attractions. Good examples include:
Crocosaurus Cove Big Croc Feed VIP
Visitors have the chance to feel very special with the opportunity to feed big crocs up close.
Taronga Zoo Animal Encounters
There are lots of exclusive animal encounters available for purchase at the Zoo!
Polynesia Spa Private Pools
Guests can escape from the busier public pools by booking one of their private pool packages.
Universal Studio VIP Experience
For a premium price, the VIP Experience provides visitors behind the scene tours, VIP lounge and dining access, private tour guide and front-of-the-line escort to rides.
Gemtree Wines Wine Club
Membership to their Wine Club includes special inclusions such as exclusive invites to member only events at the winery.
Jacobs Creek Cellar Door Experiences
Gourmet Picnics, Food and Wine Masterclasses, Cooking Classes and Private Wine Tasting are the premium priced experiences that visitors can purchase at the cellar door.
Time saver/done for you
Offering a product that saves your Ideal Customer’s time is something they are often very happy to pay for.
What are your Ideal Customers pain points around your experience?
Once you understand their pain points, it’s usually easy to identify where you can offer them a premium priced product they will be willing to pay for.
As a guide, meal preparation, reduction in queues or wait times, food shopping and finding local experiences are all common headaches for travellers.
BBQ Pack Tingirana Noosa
They offer their guests a number of “done for them” luxury upgrades, such as BBQ packs so they don’t have to food shop, and have the convenience of the food preparation done for them. All they need to do is fire up the BBQ and assemble the finished meal!
Front of Line ticket, Universal Studios
No one likes waiting! In addition to their VIP Experience, Universal Studios offers a “Front of Line” ticket that saves visitors time by being able to skip queues for rides and shows. Winner!
Tips to Develop your own Premium Product
Now you have inspiration of different premium product types, it’s time to consider what premium priced experience you could offer your customers. Following are three tips on creating your own premium products your Ideal Customers will love.
Identify Your Ideal Customer Motivations
Profile your Ideal Customers, and get really clear on their pain points or aspirations.
Once you understand their motivations, then think about how you could meet their needs by offering a premium priced product?
Ensure Perceived Value Exceeds Input Costs
For a premium product offering to increase your profits, it’s essential that the cost to offer the premium product is lower than the value it delivers to your guests, otherwise you are just offering another product with the same sales margin.
This is easy to achieve once you understand the previous point and the next point….
Sell Results, Not Features
Once you have decided on your premium product offering, for it to sell like hot cakes, it’s super important you describe the results and benefits your Ideal Customers will receive from the premium product.
Don’t just focus the features and inclusions, or you may struggle to create demand from your Ideal Customers for the product.
Over to you
What premium priced product could you offer to your customers?
If you are already offering a premium priced product to your customers, then we’d love to hear about it below in the comments!
The post How to charge a Premium Price for your Tourism Experience appeared first on Tourism eSchool.