What is the definition of Pricing Strategy in the hotel industry?
Price is the cost that is put to a product or service and is the consequence of a intricate set of calculations, investigate and understanding and danger taking skill. A pricing strategy takes into clarification segments, ability to pay, market circumstances, contestant actions, trade margins and input costs, amongst others. It is targeted at the defined customers and not in favor of competitors. Having a Pricing Strategy is a normal practice within most Revenue Management strategies.
There are quite a few pricing strategies:
Premium Pricing is a price policy aimed at setting a elevated cost for a premium product. Such premium pricing is completed in order to emphasize the elevated value, better rarity and position associated to a premium product.
Penetration pricing, is a pricing strategy intended to increase market share quickly, often for a new merchandise in want of endorsement. It is extensively understood that although the cost might be low in the start it is widely understood that with time the cost will go up for the product as soon as market share objectives are attained.
Economy pricing: Is a pricing strategy intended for the masses, with very small marketing and advertising costs. This is usually done for products that generally aren’t in need of great endorsement.
Skimming strategy: Price Skimming, is a pricing strategy which charges elevated prices for a manufactured goods or service in the launch. Thereby targeting early adopters which are interested in paying a utmost price for being the first to access a product. This is often done if a product is the first of its kind, as it allows to accuse high prices until competitors get there in the market – which afterward will lower the prices for all marketplace participants.