In an effort to rise above the competition and increase revenue, the client stepped up their marketing efforts by securing Space Genius marketing services with a Pay-Per-Click (PPC) campaign. With this initiative, they were able to obtain a high volume of parking reservations at the price of $4.99 per day. Since their low parking prices resulted in a spike in reservations, the client concluded that more must be better, so they raised their rates by $1 per day for the following test month in hopes of obtaining a higher profit margin per reservation.
After a month of advertising the $5.99 rate, the client compared the reservations and profits of previous months with the promotions at the two different price points and found that more than 30% of the reservations and profits were lost YOY, despite the increase in price per day.
It was clear after analyzing the data that there was a pricing “sweet spot” in the operator’s market that was missed. It became clear that in the case of price setting more is not necessarily better. It also became evident that knowing your market and studying your data should determine pricing decisions. Lesson learned, the client then lowered their rates back to $4.99 per day.