How to Get 5X Market Share Increase with Dynamic Pricing
February 13, 2020
5 X Market Share Increase with Dynamic Pricing
No one’s surprised when the flight they want to book on Christmas eve is four times the price of any other time that year. Disemboweled, perhaps, but not surprised.
Nor are we shocked to find that today’s Amazon prices are not what they were yesterday. Or that swimming costumes are on sale in fall. Or that holidays this year in Hong Kong are cheap.
We’ve become familiar with dynamic pricing in certain industries. It’s part of the game, right? Book early for cheap seats. Buy when demand is low. The market exerts its force and prices respond. Time of year, weather, demand, news, competition, trends… all affect price.
So why, if dynamic pricing has been successfully applied to some industries, has it not been applied to others? Why do we fight the varying conditions that affect our business, rather than leveraging them?
Well, that’s exactly what leading ticket-selling organization, Ticketcorner, was wondering.
Thinking Off-Piste About Pricing
For years, Swiss ski resorts, like SkiArena Andermatt Sedrun, had been fighting a losing battle with unpredictable ticket sales due to climate change and competition with other pastimes. Their customers were paying higher prices during the peak season even though they couldn’t be guaranteed good skiing weather.
Ticketcorner could see that they could help by bringing ski resorts into the future with dynamic pricing.
After all, the skiing industry is a prime candidate for it: it’s seasonal, entirely weather-dependent, highly competitive, and caters to a wide range of customers (seasoned pros, tourists, ski schools, après-skiers, and bucket listers). People want to be able to book early as well as buy tickets on the day, and changes in weather have a major impact on sales.
“Dynamic pricing has been a topic for a couple of years in Switzerland with the lift operators. However, nobody really took the risk to start,” says Michael Meier of SkiArena Andermatt Sedrun.
Manager of Business Development at Ticketcorner, Enrico Karg, and his team set about creating their own dynamic pricing software for ski resorts, only to discover very quickly that it “is a very complex topic” and “it’s a better idea to hire […] experts in this”.
So, he did.
Pricefx – The Perfect Partner
Enrico set about looking for flexible and intuitive pricing software that would be sophisticated and robust enough to deal with Ticketcorner’s detailed ski-ticketing vision while also being affordable enough, considering they were taking a risk in the market.
“We […] compared [Pricefx] with three other vendors and then decided within the team that Pricefx would be the best option for us in terms of technical capabilities and their approach to pricing,” he says. “…We didn’t know […] if the end consumers would accept the new pricing system. With the Pricing-as-a-Service [PaaS] solution, we were able to decrease our investment significantly.”
So, he met with Patrick Adams and Jochen Schmidt of leading pricing software vendor, Pricefx, to discuss Ticketcorner’s needs for a flexible dynamic pricing model, the likes of which had never been done for ski ticketing before.
Prices would need to be based on multiple factors, such as snowfall, visibility, temperature, day of the week, and many more. Early bookings would benefit from lower prices. And Saturdays with perfect conditions should bring the highest price possible.
Challenge accepted. And Pricefx got to work.
Lukas Nusbaumer, Technical Project Manager of Ticketcorner said: “…The time was really short – bug fixing or new features were implemented very quickly. So, that was a great benefit for us. I never met a company with software that is so flexible, but also where we have the possibility to improve the system on our own.”
Ski Resort Gets a Major Lift!
SkiArena Andermatt Sedrun resort in Switzerland took the brave decision to join the great dynamic-ski-ticketing adventure with Ticketcorner and Pricefx.
“As pioneers in this key arena, which we started two years ago, we are almost at the end of our second winter and have had some good experiences,” says Michael Meier of SkiArena Andermatt Sedrun.
Good indeed! Not only did they multiply their online share five times, from 2% to 10% in the first year, but now, in their second winter, they’ve nearly doubled that again, being almost at 20%!
As of April 2019, they sold over 160,000 skier days via their ski platform in the 2018/19 winter season, a growth of 60% over the previous year.
And on top of this, SkiArena Andermatt Sedrun now have excellent visibility into the activity of their customers, uncovering more pricing opportunities, and enabling them to serve their customers even better going forward.
Gold Medals All Round
Applying dynamic pricing to their industry has really paid off for Ticketcorner too, with a staggering five times increase in market share!
“More and more, winter sports enthusiasts are recognizing and using the advantages of online ticketing, as confirmed by […] Demoscope. The advantages include, in particular, the avoidance of queues […] and lower prices thanks to early-booking discounts. The latter was particularly popular for multi-day ski tickets.”
In fact, of the 70 resorts working with Ticketcorner, five have already signed up for dynamic pricing.
“We love the initiative that Ticketcorner is driving forward with this innovative concept,” says Patrick Adams, Chief Revenue Officer at Pricefx. “I really think what they’re doing in the market is really a game-changer. I think this is going to be a benchmark of dynamic pricing model ideas in the future in many other different business areas.”
Dynamic pricing software can be the difference between allowing external factors to shape your business and putting control back where it belongs – in your hands.
Despite the difficulties that the skiing industry was facing, thanks to the pricing sophistication of Pricefx and the out-of-the-box innovation of Ticketcorner, the forward-thinking ski resort, SkiArena, was able to improve their revenue stream, augment the customer experience, optimize prices across a wide range of conditions, and gain the ability to plan long term – despite external market forces.
Isn’t it time you took control of your pricing too?