The point is this - price is a fluid concept. In the retail world, price is cost plus margin. At least to start with anyway, then you start discounting as the stock doesn’t move. In the golf tee-time world we’re not dictated by cost (it’s virtually all fixed, not variable) but we are burdened by old school practices of simplistic prices based on rack-rates, and a competitive market loaded with excess supply. All bad news? Nope. Just the wrong conversation. Never mind what the other courses are doing, what does the customer want?
We do get this - weekend and twilight rates have been around for years. But what else do golfers value? Let me throw up a few:
- preferred access to peak tee times
- early starts
- fast rounds
- on-the-hour tee times (yes, they do)
- bigger groups
- weather guarantees
- a hot burger cooked to arrive when you finish your round
Trouble is, the golf industry loves rack rates. We’ve trained our customers to look for them. They judge us by them. "You're a $40 course", right? Meanwhile, the airlines and hotels have shown us what fixed-cost base, perishable inventory management is all about. What does a flight to Sydney on Qantas cost? Well…. it depends, doesn’t it? Southwest Airlines led the charge with their innovative sale of advance-boarding passes. Frequent flyer schemes selling bonus points took it to a new level - selling points which are their own future revenue?! I love it! The hotel industry has “Revenue Managers” who rule the roost with complex models and targets. Whole teams manage prices for big chains, including prices across third party channels.
So what can we do? Well, to start with move away from rack rates. Don’t publish them, don’t talk about them. The price is what it is - weekend rates are higher, weekday lower. When it’s school holidays, they’re up. Union RDO on a Monday? Up again. Booking the day before as opposed to a week out? Yep, costs a little more buddy. But if the prices are all compared to an advertised rack rate, customers rightly feel wronged. No-one likes paying a premium! If you must list a rack rate, list a super high one and always work below it (check the back of your next hotel room door, often the rack rate is listed and it will blow you away).
Next, get your tools sorted. Quick18 has industry-leading demand-based pricing tools, and allows for matrix-style prices on its booking engines - but many online bookings systems will give you some controls.
Then - develop a strategy. Plan well ahead, know what your customers value and price accordingly. For a great (and easy) read, check out Rafi Mohammed’s “The 1% Windfall”. Pricing theory is as complex as you want it to be, and is a key tool in a tough market that won’t allow flat price increases every year.
When you’re selling tee times, there’s a great concept of the right price, for the right person, at the right time. Your job is to find it! In 10 years, I’m betting the golf industry catches up and we’ll be seeing widespread price variation in the market - and the role of any Ops Manager or General Manager will include revenue management.
As always, contact me to discuss your course. I love a chat. As for my supreme negotiating skills? Well, that rug never did arrive in the mail...