Dynamic Pricing

Dear Mr. Theme Park:  I just read where Universal Studios is switching to a variable pricing program.  Can it really have a positive impact on Universal, Disney, and other parks considering the pricing program change?

Carolyn

Dear Carolyn:

Nothing stands forever and change is good.  

When you examine our industry’s pricing practice over the years, you find that we basically started out selling “strip tickets” at a cost of about 5-cents per ticket.  Rides and attractions based on their popularity were priced accordingly.  A roller coaster, as an example, may have cost 4 to 5 tickets, and a carousel 1 to 2 tickets.  The industry utilized the “strip ticket” concept for decades.  It was not until Angus Wynne opened Six Flags Over Texas in 1961 that the pricing parameters of amusement parks and theme parks to follow changed dramatically.  

Six Flags introduced the Pay One Price (POP) concept much to the delight of moms and dads who take their children to parks.  The POP concept eliminated the “nag factor” of children always pulling and tugging on mom and dad to ride an attraction that heretofore may have been too expensive for the family to ride.  All rides and attractions were included in admission, so like eating at a buffet, you could enjoy all you wanted.

Carolyn, the concept was very successful when introduced, yet many other parks were still skeptical.  As it caught on, traditional amusement parks located all over the USA began testing the POP program. As the public became familiarized with the POP system, they embraced it and fully adopted it after the several years of testing that many parks introduced.

The biggest pricing change was when Disney was forced to replace their ticket books (known as E, D, C, B, and A tickets) for the enormously popular POP admissions program.  Disney’s ticket book program was a sophisticated variation of the ticket-by-the-strip program, which worked quite well for many years.  It was the evolution of strip tickets, long gone after POP’s success.  

Now comes the Dynamic Pricing/Yield Management pricing concept to theme parks.  And why not?  We are a mature industry which has to continue to find new ways to “mine the market.”  When you look at penetration rates of theme and amusement parks, you find that they are quite high, established, and have been for years.  To continue to maintain and grow market share, continual approaches to “mining the market” must be explored and implemented.  We believe at ITPS that dynamic pricing is the next wave of pricing to come to our industry.  POP has been in existence for 55 years.  It has served us well.  But, due to the maturity and changes in how people plan, spend, shop, and utilize social media to shop, dynamic pricing is the way for parks to continue to grow attendance and revenues.

Carolyn, it is interesting to note that by name, a lot of people are not familiar with this pricing concept, but they use it all the time.  For years, airlines, hotels, and car rental companies have employed dynamic pricing.  It works and works well when properly instituted.  There are many aspects to the program that allow for “calling audibles” if need be due to certain issues a park may encounter during the season.  Knowing how to precisely manage the dynamic pricing concept is very important to the overall success.  It is more than a normal park discounting program.  Transparency from the launch is extremely necessary.  However, once properly established, it will become a booster to growth in many ways.  Let me briefly say, not only can dynamic pricing be instituted at the front gate admission/pricing, but also internally in food and beverage, games, and retail.

In answer to your question, yes, we believe that dynamic pricing / yield management will have a significant and positive impact on the park industry as more and more parks try the concept.  As I said, change is good.

Thanks for the great question!  - Mr. Theme Park