What is the meaning / definition of Pricing Strategy?

A Pricing Strategy is a management strategy, based on the Best Available Rate. It is also called a fixed tiers approach because, you are going to fix your BAR, meaning the lowest price available in your and set the other rates according to it. For example, your BAR is set at 100 euros. Your reward program rate will be 50% off the BAR and your OTA price, 30% off the BAR.

Therefore, if the goes up or down, the other prices follow. Different level of BAR can also be set up, according to the rate.

A in Wimbledon (London, UK) wants to make as much money as possible during the world-famous Wimbledon Lawn Tennis Championships. They know that demand for rooms and other services will be very high during that time in summer. So, they plan to increase their prices then, in parallel to demand escalation.

It is a pretty simple strategy, but not really relevant in the actual distribution context. Indeed, this strategy can create a loss of revenue; as you base your on rate, when the occupancy rate is reached, some channels are going to be closed. This will induce a loss of visibility or eventually customers redirecting to third party channels if you close the direct one.

See also:

  • Dynamic Pricing


  • Best Available Rate Pricing Strategy


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