Dynamic Pricing in the Entertainment Industry: The Key to Optimizing Profits
Dynamic Pricing Droplabs is an innovative AI-powered solution that is becoming increasingly popular in the entertainment industry. It is already being used by the largest Tatra National Park, Baltov Tourist Complex, or Terma Bania. Its uniqueness lies in bringing benefits to both the facilities and their customers. Guests get the opportunity to buy a ticket at a lower price, and facilities significantly increase revenue from guests.
This strategy involves the introduction of dynamically changing prices in exchange for the older model of a “rigid” price list. Ticket prices are raised by an advanced algorithm in real time when the algorithm detects that customers are able to pay more for a given date. And the fact that customers are able to pay more is influenced by various factors such as the weather or the distribution of free days. Current demand trends are also analysed in real time. At the same time, the algorithm for each attraction is tuned individually based on, among other things, historical data, which helps to predict consumer behavior for similar circumstances in the future. However, the amounts are increased in such a way as not to affect the attendance of guests. The price list starts from the base price, and the earlier guests purchase tickets, the better chance they have for the lowest price. Finally, the average revenue per customer is higher than in the case of the standard price of tickets for one amount.
Droplabs is the first company in Poland to introduce a Dynamic Pricing solution based on Artificial Intelligence and advanced mechanisms called Machine Learning so that the owners of attractions can maximize their profits, and customers gain greater flexibility in choosing the date of the visit.
Automation and optimization of profits
Operating in specific ranges, the system adjusts prices based on changing market conditions, raising them at the right times, while avoiding damage to attendance.
The median increase in revenue per visitor in the first year since the launch of the strategy is as much as 26% growth year-on-year! We are talking about an increase on average per visitor, and not just visitors from the online channel!
Benefits of early purchase
According to the data of our customers, in the case of conducting a standard pricing policy, up to 95% of customers buy tickets to attractions on the day of their realizationher. With Dynamic Pricing, guests who bought a ticket at least one day in advance represent an average of more than 1/3 of customers. Why such a difference and why one of the key elements of Dynamic Pricing is Encouraging guests to buy tickets in advance?
Customers who decide to buy in advance are rewarded with a lower price, which makes them happy to “catch a bargain”. Depending on the facility, different strategies can be used, such as offering tickets at a slightly lower price than before or for an amount lower than expected in the planned increase. With this solution and flexible fork, you can introduce a raise in a soft safe way, and customers still feel the opportunity. In addition, thanks to advance sales Guests are less likely to change plans. They are not distracted by advertisements of competitors or weather fluctuations, which significantly increases the likelihood of their visit to the facility. This translates into real additional revenue.
In addition, the earlier purchase of tickets allows the facilities to better plan and prepare the service, which translates into a higher comfort of guests. Knowing the expected occupancy for a given date, it is easier to prepare, for example, the number of necessary stands or cashiers.
What's more, customers who buy tickets in advance are often happy to spend money on the spot for additional services such as catering or souvenirs. The cost of a ticket that has already been “forgotten” does not affect their purchasing decisions on the day of the visit, which favors more expenses on the spot.
In addition, thanks to this solution, the proper conduct of marketing activities increases their effectiveness. Clear and consistent communication about Dynamic Pricing makes customers want to buy a ticket as soon as possible and benefit from a lower price, which has a positive effect on the conversion from advertising
The Flat Price Challenge
When the ticket has a single, fixed price it is almost impossible to hit the financial capabilities of a wide range of customers. For some guests, the property will be too expensive, while in other cases the rigid price does not explore what the customer is able to pay anyway. Guests with a smaller wallet are more likely to buy a ticket early or choose less popular dates by adjusting their plans. In addition to reaching a wider spectrum of customers, it also allows you to spread traffic from the focus of the busiest time to the whole day. More affluent customers, on the other hand, will choose the dates they want to go to the most, regardless of the price differences. In the end, the average revenue per customer is higher than in the case of a fixed price, and guests are satisfied with the opportunity to choose dates.
Customer acceptance and education
Customers are increasingly associating the Dynamic Pricing model with other industries, such as airlines and accommodation bookings. What is important, however, Dynamic Pricing Droplabs is fundamentally different from models known from airlines or hotels - well, the customer, buying in advance, has a guarantee that the price will not fall anymore. This allows you to build trust and consistent communication that encourages you to plan your visit. Attraction guests accept this strategy in the context of tourist attractions and also quickly learn how to use it. It is a model that has been used for years in tourist attractions in the USA and Western Europe. Thanks to the ability to independently search for optimal prices and dates, customers feel more involved in the purchase process.
Industry Evolution with Dynamic Pricing
Dynamic Pricing is not only a tool to increase revenue, but also a way to better manage the facility and improve the guest experience, as seen by the increasing number of positive Google reviews from our customers with Dynamic Pricing. The sales funnel moves to the online channel - after launching Dynamic Pricing Dropabs - most often 2 out of 3 guests choose the online channel to purchase the entrance ticket. With flexibility in pricing, attraction owners can adapt their offerings to changing demand, resulting in higher guest satisfaction and higher revenue. As the entertainment industry evolves, Dynamic Pricing is becoming a key component of marketing strategies that can deliver tangible financial benefits.