The right pricing depends on who you’re targeting, so framing and testing are critical.
In this blog based on Episode 18 of our Marketing Your Attraction podcast, Brad and Philip talk about how to determine the admission prices for your attraction so you make money. Although most of us got into this industry because of our passion, enthusiasm, or fandom, at the end of the day, if we want to continue investing and expanding our attraction, we have to pay attention to the bottom line.
Is Your Pricing Focus on Value or Luxury?
Philip offered that the first thing to consider is whether you’re looking at pricing as a value or a luxury play. “I have kind of a different view of pricing, because I’ve always priced things using competitive-analysis reference points, doing a little bit of testing, or getting outside help such as hiring a consultant to give opinions on what the market will bear and where we sit in it,” he explained. “One of the first considerations here is thinking about the frame you’re putting your attraction in and considering whether your attraction is a value or a luxury within that frame.”
Philip gave an example, although he pointed out that it doesn’t translate directly into the attractions space. “Gantom’s lights can be used in many different markets, which is a unique feature. Most commercial lights can’t be used by a lot of different markets because of their size and other components. However, because of our lights’ broad applicability, our customer base includes attractions, escape rooms, and haunts as well as full-scale theme parks, zoos, aquariums, museums, and various kinds of architecture—regular commercial buildings, housing, dorm projects, multi-family housing projects, themed environments for restaurants, and even casinos. They really run the full gamut, which is unusual for a commercial lighting brand,” said Philip.
The Importance of Framing
“This presents a weird framing problem, because, on the one end, when you’re pricing these products for escape rooms and haunts, they’re definitely seen as luxury items because of the price point and the competitive landscape. When you have a young haunt, often you’re just getting consumer lights and trying to make them work. Maybe you’re buying stuff from Walmart, Home Depot, or Spirit Halloween, and getting all these regular lighting effects. You’re buying as a consumer and you don’t need a rep or spec information,” he said.
“In the film industry, a lot of Gantom’s lights are seen as disposable because they’re inexpensive—comparatively speaking, within the category of a small light. These customers don’t even bother to store them, because they’re considered disposable. In this case, they’re considered value items because they fall on the disposable end of the spectrum. They’re pretty close to that end on the architecture side as well in terms of the similar lumen or data fixtures they replace. Ours are less than half the cost,” stated Philip.
“So, there’s a lot of juggling we have to do in the framing management of these different markets, and we need to be aware of which market the products are going into and how that market perceives the brand. Either you’re sticking in that market because of the value or you’re leading the value, depending on what you’re sliding into,” he explained.
Consider Who You’re Targeting
As a comparison related more directly to the attractions industry, Brad suggested Disneyland. “They’re higher end and would be considered the luxury play of the theme park and attractions industry. However, what consumer they’re targeting and what product they’re targeting determines whether they have that value-pricing message or if they’re going luxury. When they do their three-day, discount tickets, usually in the offseason, they’re targeting the consumers who are investing a considerable amount in their family’s trip. That’s a lot of money for the segment they’re targeting, so that messaging is different than some of their less price-focused offerings, where they’re targeting higher-end families who don’t see those ticket prices as such a big investment,” said Brad.
“For, example, if you’re a middle-income family of four, a trip to Disneyland is a significant investment, right? You’re going to be very price-conscious. Whereas, if you’re a much higher income family of four, it could be viewed as a drop in the bucket. So, we have to think about who we’re targeting—not just how much we’re going to charge but how they’re going to view that pricing.”
Brad continued, “On the Knott’s Berry Farm side, we’re much more a value play in the California market, because our tickets are significantly cheaper than Disneyland or Universal Studios. However, just because we’re charging less doesn’t mean consumers are necessarily seeing us as that value play or as a cheap, easy option for them. If a family of four who are lower to middle income is looking at buying tickets or season passes, that’s still a really big investment for that family,” he said.
“Imagine the journey your customer is going through when they’re looking at your pricing, and make sure you explain that. The pricing is obviously a number amount, but it’s more than that. If you’re going with the season pass, play with it and emphasize, “This is a ton of value you’re getting for this price.” If you’re going the luxury route—like a lot of escape rooms and higher-end haunted houses do in the Los Angeles market—and charging $150 for a 30- to 60-minute experience, you have to describe that in a much different way than you would if you’re selling a haunted house for $25 to $30,” he noted.
How to Start Thinking About Pricing
“Start your thinking about pricing by first making sure you can cover all your costs and make a profit,” Brad continued. “Clearly, that’s the most important place to start—you need to understand those costs. After that, start doing competitive research. This can be as easy as Googling and as complicated as getting a pricing consultant and really trying to figure out what it makes sense to target in your market. At the very least, you probably want to do some research and look at incomes and family sizes in the area you’re targeting. A lot of that information is free from the US Census, or you can go through your local visitor’s bureau. They’re a great resource to get that type of information. You don’t want to introduce a high-end haunted house, escape room, or whatever the attraction or experience is if the market can’t support that. Lastly, I recommend testing your pricing before you develop an event. You want to be able to do A/B tests of that event before you get into full-on development,” he said.
Philip offered, “There’s this new trend evolving in the digital entrepreneur space, and there’s an example from Pat Flynn in his book, Will It Fly? It’s becoming a pretty popular theory. Essentially, the process they recommend is coming up with the concept for what you’re trying to sell in your event, product, or course. In the book, the example is an online course, but the theory works for events as well. You create a presale or a page before you create the product or event and send out an offer to purchase that product or event to a segment of your market. Generally, this is a segment of a highly engaged market—something like the top 10 to 100 people or families on the list that would be the ideal customers for what you want to create. You see whether or not they buy. You might even call and ask them, get their feedback, or figure out why they didn’t buy. This is a form of testing to figure out how that price point sits with them and how eager they are to make the purchase,” he said.
Don’t Trust Anyone’s Predictions, Ever
“People are really bad at making predictions, even experts. So, don’t trust anybody’s prediction, ever,” said Philip. “Don’t ever go into your research trying to get a prediction, because that never works. The best thing you can do is figure out why someone didn’t do something or what they’ve done in the past. The advantage to sending this pricing presale out to people is it allows you to follow up with them and ask why they didn’t do it rather than coming at it from a predictive angle. You can ask people why they didn’t purchase that thing and figure out whether to slide up or down. Depending on the percentage you get to book for that price point, you could slide it up. Or, if it was too high, you can think about sliding down,” he explained.
The Importance of Tiered Pricing
“I have one more thing to add here—the inclusion of tiers. It’s awkward for Gantom to put in tiered pricing because it’s a product company. We do have tiers, but it’s more like tiered products. However, in general, you should always be engaged in tiered pricing, because of the contrast principle. The contrast principle goes like this—you always present the highest tier first. For example: “For this year’s event, there’s a VIP package for only $99.” Then, you list the regular pricing and maybe a couple more tiers—no more than three, because people get paralyzed with too many choices. Two or three choices is optimal, but you always want more than one. By staying away from single ticket options and always offering tiers with the higher-priced tier first, the price you actually want them to pay will seem reasonable by contrast,” said Philip.
“We see this all the time in online sales where there are three options and the middle one is highlighted. That strategy uses both of these techniques—the tiered system and contrast pricing—together, to give your customers options worth considering,” he said.
Be Realistic about Capacity and Throughput
“It’s hard to get into pricing when you’re not talking about a specific attraction,” said Brad, “but I think we’ve done a pretty good job of giving you a few ideas on what to think about. The one other thing I wanted to mention isn’t completely specific to the attractions industry, but very important to it when thinking about pricing. We need to think about capacity and throughput. I see this so many times. An attraction wants to be a value play, but they don’t have enough capacity. As a result, they oversell tickets because they have to sell a certain number of these cheaper tickets to make up the revenue they need to operate, but their attraction isn’t designed for that capacity,” he explained.
“If this is your first year doing an event or attraction, my advice is to determine the capacity, divide that in half, and calculate your pricing from there. It’s not an exact science, but, even for seasoned attractions, it’s hard to figure out capacity and throughput for that initial year of operation until you get a couple of weeks of actually seeing how guests are acting and operating through your attraction. Don’t make the fatal mistake of thinking you’re going to be able to have a higher throughput than you actually can. That can have a huge domino effect, because you’ll have a problem with guest satisfaction, first of all, and you’ll have this huge issue of creating a pricing model based on a certain capacity that your attraction can’t reach, and that can put the attraction out of business,” explained Brad.
“So, to be safe, cut your estimated capacity in half and create your pricing model from that. Hopefully, you’re pleasantly surprised. If so, you can always sell more tickets or adjust that later on, but don’t make the mistake of thinking your attraction can handle the capacity you come up with. I see this all the time in the ‘professional’ side of the industry, where the capacities just don’t come through, and it completely messes up the entire pricing model,” he said.
Philip agreed, and added, “Consider this from the consumer’s perspective. Consider it through their buying journey. When they discover you, where do you sit within their lens? This helps you break out of internal thinking. Too many times, I’ve seen creative teams sit around and calculate price based on what they believe, what they predict, or what they hear from other people, and it’s generally never good to come from those angles. Instead, test your audience, and then get factual, personal information on what price they find acceptable and why, why they didn’t buy, or why they did. Do that A/B testing or even some spot testing with portions of your group. I want to emphasize again, predictions aren’t reliable, including predictions made by your team or by experts,” he said said.
So, that’s the blog on setting prices. Don’t forget, if you’d like Brad and Philip to dive even deeper into any of the topics they mentioned, visit MarketingYourAttraction.com, sign up to be on the email list, get the contact information, and let them know what you’d like them to cover in future episodes—about pricing or any other topics you’re interested in.
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