You need to price your product at a level that will attract
visitors as well as cover your costs. Make sure you consider
operating costs, overheads, staff expenses, commissions (if
applicable) and marketing/promotional costs.
Match your price to your product
Identify similar products available in your region, in New
Zealand or overseas and decide where your product should sit within
this price band. Who are your customers? What will they perceive as
good value for money? What are they prepared to pay for this type
of experience?
If your product is an exclusive and/or personalised high-end
experience positioned towards wealthier visitors you will be able
to price at a higher level than if you are offering experiences for
larger groups, families or backpackers.
Find the balance
Consider demand and seasonality. New Zealand's peak tourist
season is from late December through to the end of March/early
April. You may need to price your product at a lower level during
the off-peak season or times of year when there are fewer of your
target visitors in your region.
Many tourism operators have peak season and off-peak season
prices. Other ways to offset seasonality could be to offer
all-weather alternatives, such as indoor activities or facilities
in winter, or to target different customers such as domestic
travellers by offering them special packages during the off-peak
season.
A number of New Zealand's international visitor markets,
particularly Australia and some of our smaller Asian markets, tend
to travel in our shoulder seasons. So it can be a good idea to
target these visitors outside of the peak summer months. For
example, Indian travellers prefer to travel in April and May, in
the peak of their summer. Check out Markets and Stats to find out
more.
It's important to keep your pricing consistent as offering
discounts or dropping your price in response to competition or a
drop in visitor numbers (unless seasonal) can make it difficult to
raise your price again when things improve. A better alternative is
to offer visitors better value for money by adding value to your
product, such as special packages that include something for free,
or a number of different activities bundled into one ticket
price.
Cover your costs
In order to maintain a sustainable and profitable business you
need to ensure your total sales exceed your operating costs.
Remember to take into account commissions - for example, if you are
selling your product through travel agents, i-SITE visitor centres,
inbound tour operators or travel wholesalers you may need to factor
in as much as 25 per cent of sale price as commission. See International
Distribution Channels for more information.
How will they pay?
Most visitors today expect to be able to pay by credit card, so
you should have credit card payment available. Not only does this
make life easier for your customers, it creates a professional
image. It also makes it easier to confirm bookings by taking credit
card details for security in the event of cancellations. Your bank
will be able to assist with credit card and EFTPOS facilities.
If you are going to offer an online payment facility via your
website, ensure you offer a secure system such as Paypal or
similar. International travellers are used to purchasing online but
do expect secure facilities. If these are not offered it's likely
they'll be deterred from making a booking.
Need more help?
There are a number of organisations that can assist you in
developing effective business plans, pricing your products and
managing your products. See Find Out More for more information.