PRICING OF

TOURISM
PRODUCTS
SUBMITTED BY: SUBMITTED TO:
LAWRENCE MS. INDU
ROLL# 20315 R.S - IHTM
Outline:
Tourism product
Pricing
Importance of pricing in tourism
Pricing strategies used in tourism
Tourism products

Tourism Products are a combination of goods and services

demanded by a tourist during travel to and stay at a destination.

These include natural, cultural and manmade attractions and

facilities such as hotels, transport and ancillary services.

What is pricing:

Pricing is one of the most important and difficult

tasks undertaken by any firm
The pricing strategy for tourism services is totally
different from other services
Price: This refers to the amount of money that has
to be paid to purchase any goods and or services
Importance of pricing in tourism
 The analysis of demand, cost, market structure, all
depend on pricing structure
 Pricing helps to allocate resources among
alternative use
 Pricing is one of the tools of competitive strategy
in the hands of big firms
Common pricing strategies used in
tourism
 Cost-Based Pricing: Is the practice of setting prices based on the
cost of the goods or services being sold. A profit percentage is
added to the cost of an item, which results in the price at which it
will be sold

 Backward Pricing: This is composed of going from price to cost

The content of this pricing strategy lies in adjusting the levels of
services and quality of products component to a certain
predetermined market price
 Market-Oriented Pricing: This strategy takes account of primarily
the external factors that influence pricing decisions. These factors
include the nature of the market and demand, competitors’ products
and price, and government regulations, etc.
 Customary Pricing: The price is based on the value placed on the
product and/or service by the buyer. Historically, customary pricing
is used for  products with a relatively long market history of being
sold for a particular amount.
 Target Rate of Return Pricing: With this pricing strategy, firms set
price which will yield a certain rate of return on the investment made
by the organization. This strategy is commonly used among the
accommodation sector.
 Premium Pricing: This is intended to setting prices above the
prevailing market price even in the long run to reflect the uniqueness
or the quality image or symbolic value of the product/service
 Value for Money Pricing: This pricing policy is intended to enable a
firm to ascertain a sizeable level of profit on the basis of earned
reputation. The price focus primarily on reflecting provision of
excellent value for money at the determined price.
 Skimming Pricing: Skimming pricing strategy implies setting
especially high price to indicate a highly differentiated product.
This pricing policy is suitable when the product or service enjoys a
highly inelastic demand.
Market Penetration Pricing: This is a strategy for an organization’s
growth by getting better share of the market. i.e. increasing sales of
current products to current market segment without changing the
product in any way through cut in prices, increased advertisement
etc.
Promotional Pricing: Under certain circumstances tourism
organizations temporarily price their products below the usual low
price and sometimes even below the cost. The objective is to
promote the demand and their offer in the hope that in case the
consumer likes at least one purchase of the product, he may go in for
THANK YOU