Article

Planning a route to perfect pricing

27 Mar 2019

There’s nothing more
rewarding in business – and indeed in business aviation – than seeing your
client enjoying a fantastic deal.

Setting the perfect price every time is hard, though. Whether using your own booking technology or selling through a Software-as-a-Service (SaaS) platform, how do you make sure you and the customer both win? Is there a way for bizav brokers and operators to achieve a perfect – and perfectly flexible – pricing strategy?

We know what you’re thinking…

What exactly do you mean by “flexible”?

There are many options in the
travel industry. For example, ‘dynamic pricing’ (sometimes called ‘surge
pricing’ by firms including Uber), sees prices and fares respond to changing
market conditions. Alternatively, ‘differential pricing’ specifically involves selling
the same service to different customers for different prices, with broad market
conditions less important than factors such as how much individual people are
willing and able to pay. Whatever your sales channel, including a SaaS
platform, you can explore these options to your best advantage. For decades
now, pioneering yield management practices in the airline industry have shown the
power of flexible pricing.

So where are we today?

Flexibility on pricing is now
standard practice for companies in many industries, from hotel operators to
e-tailers like Amazon. Game-changing digitization means you can now make price
or fare adjustments, based on complex algorithms, more rapidly than ever
before. Bizav is no exception.

Clearly, using current data
is critical, which means working with a good data partner is critical too. With
the right analysis, you can see the industry high and low price points for
specific aircraft types on specific routes, as well as the average price point.
Armed with this up-to-date information, you can make sure your prices are
competitive. Whether using your own website as an online marketplace or selling
through a leading SaaS platform, such as Avinode, you can calculate and offer
your most attractive prices in a heartbeat.

There’s a lot to like, isn’t there?

Absolutely. The many benefits
of dynamic pricing include adjusting prices to drive demand to your jets even
during seasonal troughs. And you might, for example, win a new client to your
business – or indeed to the entire bizav industry – with just a little clever
‘differential’ movement on your prices. With careful analysis of the data you
hold, can you offer a price that will work for you and also appeal to this
specific customer with a limited budget?

Are there any negatives?

Potentially, yes, but not if
you handle everything properly. Customers will get very angry very quickly if
your dynamic fares seem to rise suddenly and dramatically (just ask Uber),
especially without explanation.

Overall, then, what kind of pricing strategy should we
be aiming for?

You need a consumer-centric approach, looking at the world through the eyes of your clients. Those customers must always feel your prices are either ‘good’ or at least ‘fair’, bearing in mind online price comparisons are becoming easier every day in every industry. Customers will soon realize if your quotes are unjustifiably high compared to other operators. But people will accept price increases that respond to changing market conditions, such as peak season travel, if those prices clearly remain reasonable and ‘fair’ given in the circumstances.

You mentioned we need to source good data. What other
tactics are important?

Build trust by stating a
realistic end-price as soon as possible in the booking process. Through the
latest technology, not least on SaaS platforms, you can quickly calculate
accurate quotes. There shouldn’t be a big discrepancy between the price you
first promote and the price you finally quote a customer.

Be consistent, offering the same price for a service across all your sales channels, from central marketplaces to the SaaS products like Avinode APIs on your website. If customers see varying prices on different sales channels, they can get angry that you were trying to charge them the higher prices. And you must protect your interests too. As an operator, standing firm on pricing can be particularly hard when dealing with real-time negotiations on the telephone. Yes, you want great deals for your customers, and you want to build friendly relationships with brokers, but you must still be disciplined and professional. You need to maximize revenue. Sales teams simply cannot agree to low prices on peak travel days.

Be transparent. Let brokers
and customers know in advance if and why price hikes are coming for particular
events or time periods. Be helpful too: suggest less expensive alternative
routes and dates.

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