Notes on Tourism Pricing | Grade 12 > Travel and Tourism > Tourism Products Pricing | KULLABS.COM

Tourism Pricing

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Price

Price is the value of the goods or services. According to Kotler, "Price is the amount of money charged for a good or service. More broadly, the price is the sum of the values having or using the product or service." It includes their sacrifice, effort or money. Price determines profit and loss. A pricing mistake can lead to a business failure, eve when all other elements of the business are sound.

Price is the perceived value that is exchanged for goods or services. The perceived value is expressed in terms of money such as dollar, pound or rupees,etc. Price can be anything with perceived value not just money. Price has various names and meanings:

Interest - Paid for the use of money such as Bank charge

Tarif - Price paid to receive service such as import tariff, hotel tariff, air tariff, etc. It is also related to government tax.

Rent - Paid for the use of facility, equipment such as house rent, furniture rent, land and building, etc.

Commision - Price discount paid for serice such as sales commission, broker's commission etc.

Fare - Cost of transportation such as airfare, rail fare, bus fare, etc.

Wage and Salary - Paid for services of workers

Taxes - Price paid for the privilege such as income tax, import tax

Fee - Paid for the services of professionals tuition fee, consultancy fees etc.

Pricing in Tourism

Pricing in tourism is very complicated subjects to deal with as tourism is managed at a different level by different organizations with different organizations. Government fixes the price of visa, national park entrance fee, conservation fee. Their pricing policy is more demand based, and is government policy.

Tourism business organizations fix their prices by different names, such as rate, tariff, service charge, etc. Some business organization follows pricing policy as:

  • Single Price Policy:
    One price is charged to all customers. The price is not variable according to quantity, season, purchasing power, etc. This season is very simple to administer and to change customer but this system ignores demand, costs, and competition.

  • Flexible Price Policy:
    Various prices ae charged for various customers at different times by different names.
    - On the basis of a segment of customers - age, nationality.
    - On the basis of location - room at the ground floor or mountain facing.
    - On the basis of time - seasonal variation last minute purchasing.
    - On the basis of the market - rate differentiation according to purchasing power, and their desire or willingness to pay. For example high rate for Japan and USA market.

It is important for tourism manager to have a clear understanding of pricing system and tourism system and learn to relate both of them into practice. To set a floor of consumer perception of the product's value is the basic principle of pricing tourism service or tourism product.

Some basic points to be understood while discussing the price in tourism are:

  • Tourism Price is the Origin Price:
    This is the factory price at the point of service delivery. Buyer is responsible to pay transportation charge, entrance fee, visa fee, passport, etc Trekking prices starts from trek - starting point, rafting price is the raft - put- in- point. Tourist need to buy extra equipment to travel such as trekking shoes, books, new clothes and first aid, etc.

  • Price is not only money in tourism:
    It is related with customer's satisfaction, guardianship, positive marketing environment, the positive mental attitude of society, social and environmental integration, image, etc.

  • Price represents the quality:
    Customers judge the quality of services with price.

  • Price does not represent cost:
    In tourism many times price does not represent the real value. Everest expedition royalty is the price of Mt. Everest. National Park Entrance is not related to environmental degradation.

  • Tourism is made of economic and non-economic elements so tourism price includes non- economic and immeasurable factors also.

  • All the other cost plus luxury and status are included in the tourism product price. Travellers view tourism products as bundles of benefits and choose those that give them the best bundle for their money.

Tourism product has time value and $ value. Time value is the time it takes to arrive at the points of service. and time, duration to consume the service. Price complaints and price bargain are most frequent in tourism industry.



  1. According to Kotler, "Price is the amount of money charged for a good or service.  More broadly, the price is the sum of the values having or using the product or service."
  2. Price is the perceived value that is exchanged for goods or services.
  3. Pricing in tourism is very complicated subjects to deal with as tourism is managed at a different level by different organizations with different organizations. 
  4. Tourism business organizations fix their prices by different names, such as rate, tariff, service charge, etc. 
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