What is Dynamic Pricing?

In the context of highly dynamic markets, businesses are in need to develop flexible pricing strategies that reflect the constant shifts in supply and demand. This is the case of dynamic pricing, a revenue management strategy widely used across the hospitality industry. But what is dynamic pricing exactly? And how can it improve revenue at an RV park business?

Well, if you’ve ever used a transportation app like Uber or Lyft, you have already experienced dynamic pricing from a customer’s perspective. What these apps do is adjust prices in real time according to changes in demand.   

Dynamic pricing is a powerful strategy for maximizing revenue in an RV park or campground. It achieves this by varying prices of RV sites based on a wide variety of different factors such as occupancy, holidays, events, day of the week, seasonality, or even weather conditions. 

RV parks across North America expect their occupancy rates to keep rising in the future. This should encourage owners to seek ways of maximizing profit while keeping guests satisfied. Yet many RV park owners and managers still seem reluctant to implement dynamic pricing at their businesses.

So let’s see why it is worth it to give dynamic pricing a try.

Why Implement Dynamic Pricing?

Many campground owners and managers may not feel comfortable with implementing a pricing strategy that they are not familiar with. Some of them may fear that it is too operationally complex, or that it increases the probability of unwanted pricing errors.

First of all, almost every RV park in North America likely uses at least a simple version of dynamic pricing. Since this is a seasonal industry, RV parks usually have different rates for high and low seasons. They also tend to charge more on weekends than on every other day of the week. 

The problem with these pricing strategies is that they are not necessarily helping you get the most out of each of your sites. A much more refined version of dynamic pricing, in which you adjust prices according to the occupancy rates of each date, will allow you to fully exploit the revenue potential of your campground.

Contrary to common belief, implementing a more systematic dynamic pricing strategy does not require huge amounts of time and training. It is only a question of incorporating a process and using adequate software tools. 

It is important to keep in mind that dynamic pricing is much easier to implement if the reservation management system you are using is fully centralized. 

Take a look at the features of Roverpass’ campground reservation software.

This solution was designed by Roverpass to improve efficiency in managing, tracking, and optimizing all business needs in RV parks. Since it allows you to manage all reservations from one single view, it makes it much easier to implement a dynamic pricing strategy based on your real-time occupancy rates.

Benefits of Implementing Dynamic Pricing at Your RV Park

The main goal of using dynamic pricing in the RV park industry is to ensure that businesses get the most out of each campsite at every moment. We have explored above how adjusting prices following changes in demand and supply can achieve this.

But dynamic pricing does not only help you maximize profits. Here are some additional benefits that you will experience after you implement dynamic pricing at your campground:

Optimize Campsite Use

Dynamic pricing allows you to manage capacity much more efficiently. A direct impact of adjusting prices dynamically is that you encourage guests to book at your RV park during periods of lower occupancy. So you are not only getting the most out of each reservation, but you are also reducing the number of vacant sites during slower periods of time.

Improve Customer Experience

Anyone working in hospitality knows that maintaining high-quality service during days of high occupancy can be quite challenging. Instead, attracting visitors during off-peak times will allow you to provide them with more personalized service. This will give you a better chance of leaving them a positive impression of your RV park.

In time, you can hope to get positive reviews from these guests and expect them to come back to your campground as repeat customers.

Offer Fair Prices

Implementing dynamic prices means that your rates will be aligned with market demand in real time. Keep in mind that guests today usually look at many different options before booking. As they research for RV parks to stay, they will get the impression that your prices are fair and reasonable.

Gain Flexibility

RV parks are considered a recession-proof business because of their affordability. This is the reason why, even in times of economic hardship, the industry keeps thriving. But this also means that RV park entrepreneurs need to be aware of fluctuations in the market. 

Dynamic pricing makes RV parks more agile in adapting to changes in demand and competitor pricing. This level of flexibility is crucial to thrive in today’s ever-shifting business landscape.

Maximizing RV Park Revenue with Dynamic Pricing

Though widely used across the hospitality industry for years, many RV park owners have been reluctant to implement a more sophisticated version of dynamic pricing in their businesses. But the vast transformations experienced by the industry in recent years should incentivize campground owners and managers to try new strategies.

We have mentioned in different articles in this blog how the ways RVers travel and use their vehicles have been changing. At the same time, digital technologies have brought about both opportunities and challenges for the industry.

Thriving RV parks combine the tradition of exploring nature during vacations with the strategies and methods of modern entrepreneurship. Dynamic pricing is one of these methods, a revenue management strategy suitable for a market that is being constantly reshaped.

At Roverpass, we are committed to providing RV parks with the tools they need to rise to the challenge of this highly competitive market. Browse our blog to find more articles exploring some of the most interesting topics that are being discussed in the RV park industry today.