Choosing a pricing structure can be tricky. Fee-based and all-inclusive pricing both have their advantages and disadvantages. One is right for one campground, and the other is right for a different campground. Which one is right for you? That depends on quite a few variables. Let's explore the differences between the two structures along with advantages and disadvantages with each one.
Fee-based pricing structures are based on a low advertised rate and a fee per item model when the customer arrives. For example, the advertised nightly rate is $35 per night, which includes 30 Amp service, 2 people in the RV, and up to one car onsite. When the customer arrives there are add on options available. Add on options can include things like a resort activities fee, 50 Amp service, extra vehicle fee, extra person fee, pet fee, and a wifi access fee. As you can see in the chart below, a $35 per night fee can quickly turn into $61 per night. There are advantages and disadvantages to a fee-based pricing structure.
Fee-Based Pricing Structure
- Advertise a low nightly rate to draw in customers.
- Draw a diverse customer base. Your resort will get everything from families to full timers with this model. This can help diversify your customer base, which can be good during harder economic times.
- It is a flexible model. Customers who use less pay less. Customers who use more pay more.
- Marketing can be done based on a reasonable nightly fee.
- This model is ideal if you have a wide variety of activities geared towards both kids and adults.
- Customers can be turned off because those who use more can feel nickel and dimed.
- Using this model makes it difficult to focus on one demographic and therefore difficult to target your marketing.
- Customers who pay more can sometimes feel ripped off. This can create a whole host of problems with reviews and repeat business.
- Marketing is all about the low rate. Sometimes that can draw non-ideal customers.
- This model doesn't allow everyone to take advantage of all your resort has to offer, which can be reflected in reviews, etc.
The all-inclusive pricing structure is a simpler model, but it can be tricky in different ways. With this model, you would set one price that covers the nightly rate and all of the extra goodies. In this model you are counting on not everyone using all of the amenities of the park. In this case, it would be wise to begin with an average of the low nightly rate and the higher fee-based rate above. The average from the example above would be $48 per night to all customers regardless of how they use your resort. This model also comes with advantages and disadvantages.
- The higher rate might drive away some customers.
- This model will draw a less diverse customer base. This can be good, but it can also hurt you during harder economic times. If gas goes up to $7 per gallon, then people are going to stay closer to home. What if your customer base is mainly full timers? You might be in trouble.
- The amenities at your resort may get more heavily used, which could result in time and money spent on repairs and replacements.
- This model is more ideal if your resort does not have many extra activities to offer families.
- This pricing structure is easier to keep track of. It's easy for employees to understand and manage.
- Customers will appreciate that the rate is the rate and that there are no additional fees.
- This model will attract a more specific demographic, which will allow you to target your marketing.
- All of your customers can take advantage of all that your resort has to offer. This can help with reviews of your resort, which can lead to more customers.
- Your marketing can be done based on the quality of your resort and not the nightly rate.
Which one is right for your business?
Ask yourself these questions:
- Is my resort more marketable to adults or to families?
- Are the amenities at my resort HONESTLY worth an up charge?
- Do I want to diversify my customer base? Am I worried about diminished business in hard economic times? Could I diversify if the need should arise?
- If you're currently using a fee-based model: Do the reviews of my resort reflect poorly on this model? Are there lots of complaints about the fees?
- Do I have more amenities geared towards families or towards adults?
- This is the most important question to ask yourself. Where is most of my profit coming from? If you are fee based, is most of your profit from fees or from nightly rates? How many people take advantage of the offered up charges? Why do they take advantage of them? If you are all inclusive, could you be making more if you went fee based? Which customers might not return due to the increase in the nightly rate?
- If you answered adults, then you should lean towards all-inclusive pricing. If you answered families, you should consider fee-based pricing.
- If you answered no, lean towards all-inclusive pricing. If you answered yes, you should consider fee-based pricing.
- If you want to diversify, lean towards fee-based pricing. If you want to focus on specific demographics, consider all-inclusive pricing.
- If there are lots of negative reviews, you should consider at least revising your fee structure based on those reviews.
- If you answered families, you should lean towards fee-based pricing. If you answered adults, then you should consider all-inclusive pricing.
- If you answered I don't know or I'm not quite sure, then Happy Camper Bookkeeping can help. We help you track where your money is coming from and where it is going. You'll get detailed reports in language you can understand on time. Every month. Guaranteed. Contact us today to set up a free consultation.