In my first college Economics class, I learned about the relationship between supply and demand. Put simply, when there is scarcity of supply, prices tend to rise. Conversely, when supply is plentiful, prices tend to drop.
This can also be true as applied to the ‘perception of supply.’ For example, the fear of a gasoline shortage, can actually cause one. How? Because the largest storage facility is the collective capacity of everyone’s gas tanks.
If many people, who normally fill up when their tank is down to one-quarter full, suddenly start refilling at three-quarters full, a shortage of supply, out of stock situations, and consequently, price increases will follow.
Gasoline is a commodity, and can be stored for consumption on another day. Perishables, such as airline seats, hotel rooms, or available inventory for wedding services on a given day, do not carry over.
If mobile disc jockey company has the capacity to provide service for 10 weddings on one day, and only books 5, it can’t service 15 the next Saturday. The revenue is lost, period.
Such is the case with hotel rooms in Las Vegas. A small item in this morning’s paper, noted the current pricing of local hotel rooms.
- Bellagio: $149
- Mandalay Bay: $110
- MGM Grand: $90
- Treasure Island: $69
- Monte Carlo: $50
- Luxor: $60
- Excalibur: $42
- Circus, Circus: $37
A year ago and more ago, occupancy for Las Vegas hotel rooms was running 92-93% on a 365-basis. Getting a room at the Bellagio usually meant spend $300-400 per night and more. Finding a rate under $100 per night at a Strip hotel was confined to one or two properties, during a very slow stretch.
The logic, of course, is keeping the hotels filled so the show rooms are active, the restaurants are busy, and the casinos are bustling. This translates into minimizing layoffs, and maximizing revenue.
While your pricing is typically not as public as a hotel room or an airline ticket, you should quietly assess whether your overall pricing model is consistent with the activity of the venues and the marketplace, generally.
Don’t jump to slashing or discounting prices, but really examine whether what your product or service was selling for, three months ago, is applicable, today.
Don’t let your ego in the way. It’s not about ‘what I’m worth,” Right now, and in the immediate future, it’s about ‘what the market will bear.’
Think clearly, decide slowly, and have a succinct plan.
The Wedding Marketing Blog
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