e-richard wrote:What a fascinating topic.
If I am to add anything its to suggest that we're trying to answer the wrong question viz "how many bands and what periods?".
The question should be "how to sell more weeks" and "how to maximise profits" using pricing as one of the tools?
That is definitely the underlying question; what I'm trying to investigate in this thread are the optimum solutions to that question - and as you've spotted, it's pretty diverse. Concentrating on my local area (not even paying regard to the UK as a whole), a very small sample size reveals a mass of different approaches. I thought my current 6 bands was high, but it's half the number used by others to arrive at a solution to what is - given my constraints on locality - almost exactly the same question.
Q. Does having 6, 12 or 14 bands help sell more weeks?
I'd maintain that fewer bands helps customers understand.
I'm not convinced that guests will look at the number of bands; their sole focus is "how much is that week, and how much is the place down the road charging?" Their interest may extend to "how much is the following or previous week, and why is there a price difference of £5 (which I've seen, and not on a low budget property!) or £200?"
Q. Does having small increments help maximise profitability?
Theoretically, it must do; if you could arrive at the ideal rate to the penny for every week of the year (and that's either no bands, or 52 bands depending on your viewpoint), you'll maximise profits. But it would be confusing to guests, and confusion breeds irritation - "why is this week £3 more than the following week, £2.75 less than the previous week? What's all that about?
The owners must be penny pinching. (discuss!) This is bonkers, I'll give up on this property."
The flip side is the question of what effect does a massive price difference from one week to the next have in the mind of the guest? Example - August is peak (let's just pick a random base of £900), October is mid at £600. Where does September fit? Early September is a very popular time for people without kids; school holidays are over so places are less congested, but the weather is often some of the best. It's outside of school holidays, so not peak rate which would put people off. But it's very popular, so not mid which would be too cheap. Likewise the few weeks immediately before peak, say late June and most of July (except that Scottish schools break earlier......); is a sudden hike of 50% from one week to the next good for business? I'd argue that we need to treat these "slope" weeks separately.
So, I put it to you that everybody's life (owners, guests, agents etc.) would be much easier with the absolute minimum number of bands that the market will bear.
I think that's pretty much where I'm trying to get, although I'd change it a bit: the absolute minimum number of bands
that is best for your business, and that the market will bear.
Apologies for taking liberties, but I'll summarise the next bit, although for discussion purposes and to avoid any inherent distortion I might introduce with this summary, the section of Richard's post needs reading in entirety, and note that he says
I have simplified my own position for the sake of discussion
Here is how I approach the market:
(My summary, and I'll stick with the convention of numbering bands from low to high.)
Winter - band 1 - low
School summer holidays - band 3 - peak
Other times - band 2 - mid
This is where my previous point about the "slope" weeks comes in, and where I can only comment on the market I'm trying to understand - ie the UK, and a particular area at that.
There's also the anomalies thrown in by, say, October half term, May bank holiday, Easter (which moves a lot) - even February half term. Maybe the only straightforward period is Christmas and New Year, which don't have "slope" weeks! Although they do raise other questions.
but surely its food for thought ?
Definitely - and food enough for a gourmand! Having done breakfast, I need to go and get on with a few things, but I hope there's more on this topic to come later.
