Dynamic Pricing on the Rise in Clubs, Golf Courses & Businesses

Have you ever wondered how rates and fees are set in the golf industry? Golf courses, country clubs, and other businesses all use a price fluctuation system called dynamic pricing. More established industries, such as airlines and hotels, have been fluctuating their prices for years and doing so somewhat successfully. Customers know this and accept it as an everyday practice. Shopping for the best price has been going on for years, across the board.

With endless choices and comparisons to available in online retail, dynamic pricing is an ever-growing reality. Even Amazon has its own form of dynamic pricing, which fluctuates with the market and the needs of certain goods and services. At any one time, you might be able to go online and find a site that’s offering an item at one price, and their competitor is offering that same item at a 25% discount. That is dynamic pricing in action.


What Is Dynamic Pricing?

Dynamic pricing is a strategy where the business sets flexible membership dues, based on the members’ perceived ability to pay a certain amount. In other words, a member who makes $100,000 per year might pay a lower fee than a member who makes $250,000 per year.

So how does a company know when to raise or lower its price point? What gauges are they using to determine peak and off-peak times?

At a golf course, dynamic pricing is a way to boost revenue. Pricing might depend on a more desirable tee time, for example. The rate might be more expensive early on a summer morning when it’s cooler and less expensive in the heat of the day, when more people prefer to swim than to sweat on the golf course. It may be a newer trend for golf clubs, but it appears to be on the upswing.

Why Are More and More Companies Turning to Dynamic Pricing?

It is much easier for the retailers themselves to stay up to date on pricing habits of their competition in online retail. In turn, customers are more willing to shop around and look for the lowest price online and go with the company that has the best offer. Instead of driving from one place to another, now customers can jump online and surf from one site to another for the best available deal.

Advantages of Dynamic Pricing

Online retailers can generate boosts in sales with dynamic pricing. If their sales are declining, the retailer can shift its price margins to meet a certain marketing trend, for instance, raising prices on an item that’s in higher demand and lowering the price-point on something that’s no longer trending. This in turn might boost their revenue and generate more customers down the road.

Disadvantages of Dynamic Pricing

Not all retailers can be as competitive as Amazon, for example. Brick-and-mortar retailers need to be careful with how low they go in price reductions. It is possible for retailers to lose money if they slash prices too much. Most retailers choose to put a marker on how low they’re willing to go on any given item when exercising dynamic pricing.


Is Dynamic Pricing Ethical, Fair, Legal?

It may seem like a new marketing trend, but dynamic pricing has been around forever. Age-old practices like haggling, at a car dealership for example, create situations where one person might pay one price and someone else another. Price can be dependent on either a person’s ability to negotiate a deal or their credit score. Even senior citizens get special rates based on their age, which is fair for them. Dynamic pricing is just that – the fairest price for each customer.

Dynamic pricing isn’t only beneficial to the retailer; customers can take advantage of the strategy as well. In the case of cell phone or cable companies, new customers know retailers will offer better prices for switching over from a competitor, for example, and can use this to get the best possible price. Because there are so many options in almost all industries, companies are fighting to gain and maintain customers. People know this, and whether it’s right or not, they use it to their advantage.

Variable vs. Dynamic Pricing

Variable pricing is set once sales start but doesn’t mean everyone gets the same price. Price could depend on the day of the week or the location of the sale. Dynamic pricing can fluctuate based on any market stimulus, whenever the retailer decides.

Booking tee time at a golf course with variable pricing means you’re always going to pay less on a Wednesday morning than a Saturday afternoon. With dynamic pricing, it means if that Wednesday suddenly becomes a public holiday and no one has work, it’s about to become much more expensive. Considering variables like the closer you are to the event or weather forecast, a price might fluctuate with dynamic pricing.

Fixed vs. Dynamic Pricing

Although fixed pricing is inclined to attract more customers, there are disadvantages. For example, fixed pricing doesn’t allow for any type of adjustment. So, for the retailer, this could mean a substantial loss if the product pricing increases or the demand becomes great, but the company doesn’t allow for variables in rate changes.

If a company fixed its golf club prices, but a shortage of manufacturing materials has started worldwide, it will lose a lot on those clubs. In other words, you could end up charging the customer a lower price for high-valued goods and suffer a loss.

Companies That Use Dynamic Pricing

We’ve already discussed how Amazon uses dynamic pricing online, but what about other retail giants? For one, Uber is great at using different algorithms to determine when to raise and lower their prices in any given marketplace. Uber looks at trends and events in the area and fluctuates their rates accordingly. If there’s a music festival or sporting event in town, the rate might be higher in the evening at the end of the event than the day before or after, when “traffic” is slower.

Airbnb and VRBO are two other companies that determine when to raise and lower their rates with dynamic pricing. They do so in accordance with the time of the year or season, different holidays like the Thanksgiving or Christmas rush, and high or low tourist and travel times – just as many airlines and hotels do.

Ticketmaster and StubHub are also two of many ticket companies that fluctuate with the market. One city may be more expensive than another for the same musician or sporting event. It depends on the supply and demand, and the time of year.

Dynamic pricing can make or break hotel chains. Typically, hotels offer a certain number of rooms for one price at any given time. Once that price and the number of allotted rooms are gone, the price point can change. Again, it’s supply and demand. The price might go up, but there may not be a demand for the room. At that point, the customers have looked and booked elsewhere, and the hotel may have lost an opportunity to fill its space.

Of course, that’s the worst-case scenario. To keep this model from happening, there are other plans in place. Hotels have different tiers of rooms at different pricing structures. Once one type of room is booked at a certain price, the hotel then moves to the next level and tries to fill that space, and so on. The hotel industry looks to this kind of dynamic structure to fill hotel space, across the board. They usually use another marker, which is time of the week. The weekdays fill slower than the weekends, unless you consider business travelers.

The airline industry dynamically prices tickets in a similar manner to sell as many seats as possible at the same (high) price point. There are tricks to beating the dynamic pricing algorithm and finding inexpensive seats on airlines. For example, looking for flights and booking late on a Tuesday night is one way to find great deals. But that all depends on the time of year and time of day you want to travel.

Dynamic Pricing Tools

There are many dynamic pricing tools designed to help you in your marketplace, whether it’s clubs, carts, or courses. These tools will help you determine the best rate, according to the data that’s important and useful for your company. Dynamic pricing will automatically update you with competitive rates at different times of the day or night, according to your specifications.


 Dynamic Pricing Tools for the Golf Industry

One such tool is from RevTechPlus. Designed by golf course owner Tom Barnhart, RevTechPlus helps country clubs and golf courses determine their rates according to the date and time of the week, at peak and non-peak hours. It is available on its own or through an integration with foreUP Golf Software.

Another option is Priswing. CEO Arnaud Zunz has drawn on his experience as CEO of two highly successful online booking companies in developing sophisticated reporting modules to help business owners make informed decisions about their revenue management.

Dynamic Pricing Tools for the Booking Industry

For Airbnb and other hotel and bed and breakfast businesses there’s Beyond Pricing. This app solution started as a property management site. When home rentals became popular for vacationers, Beyond Pricing decided to branch into a new marketplace. The app helps the renters determine a competitive price point and daily rate for certain times of the year and syncs prices with the Airbnb calendar.

This app has grown to over 120,000 users worldwide, from renters to management companies. It’s a great app for those who aren’t sure how to price their vacation rental. It gives them an idea of what’s available in their market, what’s comparable and what amenities to feature.

Another great app for vacation renters is Wheelhouse. This app is like Beyond Pricing. It boasts real-time insights into your marketplace and an individualized plan to help the renter run their vacation rental more efficiently. The app also offers personalized solutions to help renters stay on top of trends in the market. It also allows renters to be competitive with pricing, so they can change their rates at the last minute. Not all apps for vacation rentals work this way, so this is a definite plus.

The first tool on the Airbnb market was Everbooked. They set the standard for the home-rental market and allow renters to see 30 to 90 days out in booking their vacation home. They use a marketing analysis system that is competitive with the going rates in any given area. They also do a monthly analysis and marketing reports for the renter, so they can see the trend with their rental and whether their rental reaches its full potential.

With a built-in tracking system, the renter can see where the competition lies and how they compare with other renters in any given area. Specializing in analytics, the database for Everbooked covers over 3,000 cities around the world and its base is growing daily. Their listings vary from studio apartments to larger homes, with all the amenities a traveler might want or need in a vacation package.

We may not realize it, but dynamic pricing plays a large part in many aspects of daily business. As a business owner, you can put dynamic pricing to work for you every day and develop growth in your daily profit margins.