There are a lot of retail stores and websites that specialize in selling overstock (unused inventory). These are the places with the $39.99 pair of jeans that you can buy for $19.99. Shopping like this is a great deal for those of us who don’t care about buying last years style, but it is also a great deal for the company selling those jeans. Even at the discounted price they are still able to make money, sell more product, gain new customers, and maximize profit.
When it comes to setting the price of your fishing and hunting trips don’t think of discounts as evil. They are simply a business tool. Just like retailers you should be using discounts and promotions to maximize your profits. But there are some “right ways” and wrong ways” to use discounts.
For example, Three Lakes Trophy Ranch wants to stay booked until the bitter end of their season in Three Lakes Wisconsin. To achieve that goal they are offering 10% off of all their hunts until the end of 2016 (subject to availability). Fin & Field will be able to help them by promoting that discount on our blog and in our social media. Jan and Sarah Alsager are hoping to fill their calendar but also to engage with new clients. Based on experience they know that those new clients can become regulars and also help promote Three Lakes Trophy Ranch by word of mouth. The 10% discount is designed to keep the calendar full AND improve the long term health of their business. The Alsagar’s are making great use of promotional pricing.
Keeping two simple rules in mind will help you avoid any serious missteps when entering the world of discounts and promotions.
Rule #1 – Book as many trips as you can at FULL PRICE
Rule #2 – Always consider the Lifetime Value of a new client before dismissing an opportunity
Here are a few practical steps to get you started:
- Book as many trips as possible at your maximum price (full price) and book them as early as possible. It is important to start to get a feel for the amount of unused inventory on your hands.
- To fill in more dates you can offer promotions or perks to repeat customers, we talk more about that in our article on building customer loyalty. These should be non-monetary perks or slight discounts. Hopefully after this step your number of open dates has shrunk significantly.
- Lastly, when an available date approaches offer promotional pricing. Remember rule #2 and don’t be afraid to get aggressive in your discount. You will bring in new clients every year with last minute discounts and you will spend more days guiding. Some of these new clients will become regular customers and their value to your business will far outweigh the discounts you are giving. Ideally you will also shrink the amount of unused inventory each ear.
Keep using discounts and promotions to grow your customer base, if you are successfully creating customer loyalty your need for discounts every year will shrink. Eventually you will be booking most or all of your trips at full price. Clearly, there is no need to give away the farm if you can fill up your calendar for the entire year at full price. If you are all booked up AND you are satisfied with your income then feel free to stop reading. If not…raise prices (the opposite of discounts)! Being fully booked at full price is a sign that your customers value your product more than you charge for it. In this case, raising prices is not a bad thing and will most likely maximize your profit. But if you raise prices you will need to start offering discounts again. Here is an example:
A guide offers day trips and the seasons allow him to book as many as 150 days a year. His price is $500 days a year and he sells out completely. He will make $75,000 in revenue.
150 days X $500 = $75,000 in revenue
Now he takes a chance and raises his prices to $650 a day. Suddenly he only books 85 of his days at full price. He grandfathers his best clients in at $500 and books up another 40 days. Now he has 30 days left unbooked, to fill those up he lowers the price and advertises last minute deals. In this example let’s say he sells 15 of them but for a discounted price of $400. Now instead of 150 days this guide is only booked for a total of 140 days but he is making a total of $81,250 in revenue. $6,250 more than when he was fully booked.
85 days X $650 = $55,250 in revenue
40 days X $500 = $20,000 in revenue
15 days X $400 = $6,000 in revenue
Obviously this exact example isn’t going to apply to everyone but it highlights the concept. Hopefully you can start using some of these principals to use unbooked dates to make more money and improve the long term health of your business.
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Fin & Field is all about finding your next adventure. We’re working hard to provide the most comprehensive listing of services, reviews, and far reaching community available to help you take the guesswork out of planning your next adventure.
We believe in the ethical pursuit of hunting and fishing adventures and support taking from the land only what you can use and leaving it in better shape than you found it.
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