Powerful Travel Industry Pricing Tricks For Your Flower Shop
The travel business is not easy. Thin margins, heavy competition, fickle demand and a largely discretionary product.... they have to innovate to survive. And the lessons they have learned the hard way and refined over the years can be used by other industries.
The travel industry were the first to exploit the concept of yield/revenue management. They are masters at aligning their prices with the value the customer places on their product. For example simultaneously woo last minute travellers that aren't set on a destination with sell-off deals, while simultaneously gouging travellers that have to get to a particular place for a specific date. They are masters at upselling.
But does any of this apply to other forms of retail?
Resorts for example deal with peak demand at March Break. Airlines deal with peak demand at Thanksgiving. At these times people place the highest possible demand on their product and they maximize the opportunity by charging accordingly. Any hotel room or airline seat that goes unsold during these periods represents a significant opportunity cost. Florists for example deal with similar peaks at Valentine's Day and Mother's Day when so many people suddenly place a high value on flowers. These opportunities cannot be missed.
Recreational travel is a discretionary product, just like buying flowers. Both can feel like an expensive indulgence – the customer must be sold.
The airline seat or hotel room that goes unsold? That is spoilage, just like the flowers than a florist doesn't sell.
Here is just one example of how best practices from the travel business could be used by a florist. A resort will have a formula that says they want to have X% of rooms booked Y number of days beforehand. If, Y days in advance, they are over X% then they assume that they are pricing too low and can adjust their prices upwards. If on the other had they are less than X% booked Y days in advance then they assume that they are pricing too high and can adjust their prices downwards.
Now imagine the florist who is booking weddings for the spring. If they are already approaching capacity by fall or early winter they may realize that they are not charging enough and increase there prices – there is no point in "selling out" capacity at low prices far in advance.
If on the other hand they were missing quotes and had very few bookings late into the winter they could reasonably assume that they were pricing too high and adjust their prices downwards.