5 Advantages of “Pay What You Want” Pricing

For holiday and caravan parks, pricing is one big aspect of a sensitive and seasonal marketplace balance that must be struck. Many different sectors of tourism have come up with different or more dynamic pricing models or practices, but caravan parks have often lagged behind. Tradition has trumped experimentation so far as the industry has been concerned, but that may be slowly changing.

On a recent episode of the That Bad Review podcast, I spoke to award-winning hospitality manager Margaret Shannon. Margaret has many claims to fame, but perhaps one of the most impressive is the successful implementation of a trust-based or ‘pay what you want pricing model’ at Ballina Beach Village.

To paraphrase Margaret, the trust-based pricing model brought us a lot of attention, and one post about it reached over 60,000 people on Facebook. It’s already been widely discussed, and this is because it ultimately ended up quite successful for the month we piloted it. During that time, occupancy went up 70% and revenue spiked 20% as well. During the same time, operational costs only went up 1.5%. The staff were nervous beforehand but afterwards were glad we had tried it.

All this isn’t to say that this pricing model should be implemented across the board. But it can be a great tool to experiment with. Here are five key benefits it can provide.

Increase earnings  

This is an obvious one, but even if people are paying less, bringing more of them through the doors during slow times can equal a net positive. Also, some people may feel particularly generous and pay above market rate if they want to support your business.

Build awareness  

A lot of businesses pay big money to reach 60,000 people on Facebook or other paid advertising platforms. Margaret simply did it by doing something bold and then reaping the viral benefits thereafter. When something is ‘pay as you like’, the word often spreads like wildfire – so there can be a big word of mouth benefit on the backend as well.

Promotional benefits

You don’t have to use the ‘pay as you like’ model forever. Instead, you can use the model on a limited basis as a promotional tool to bring new guests in the door. It’s a great tool to have in your business toolkit.

Residual benefits  

There are many intangible benefits to being seen as an innovative business that lets people decide the value of your product. You never know what partnerships or exposures may crop up as a result.

At the end of the day, ‘pay what you want’ is a compelling trend and many different business operators have given it a crack, but it’s also one you need to embrace carefully. Research it, project how it may affect your business, set some ground rules and then perhaps, if the time is right, give it a try.

Listen to our entire conversation here!