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Dynamic Pricing for Medical Packages: What It Is and How It Works
Find out what dynamic pricing really means for medical packages.
The greatest invention in commerce might be the price tag. Before it existed, sellers would size up customers, guess how much they could pay, and then negotiate until either a deal was made or a buyer walked away.
That changed in 1873 when a shy store clerk named Frank Woolworth was left in charge for the day. Terrified at the thought of negotiating with customers, he simply put up little slips of paper with the lowest price he was willing to accept on every item. That day, the store made a week’s worth of money. It changed retail forever and launched the Woolworths empire.
Keeping prices fixed for long periods has become rare. Today, with fierce competition and so many factors at play, this approach is unthinkable. The old-fashioned seller’s instinct for reading a customer never disappeared; it just got more sophisticated.
We live in a world where prices constantly shift. Travelling to the seaside costs more in peak season. A child’s theatre ticket is cheaper than an adult’s. Flight aggregators use algorithms to adjust prices based on your device, location, or the time of day. All of this is dynamic pricing. In this article, we will look at how it works when it comes to health resorts.
What is Dynamic Pricing?
Dynamic pricing is the main tool of revenue management, which is just as important as marketing, sales, and guest services. The goal of revenue management is to figure out the best pricing strategy at any given moment to maximize income. And this applies not just to selling rooms, but also to the extra services your resort offers.
Chances are, you are already using some form of dynamic pricing, even if it is basic. You might offer discounts for retirees, have different rates for winter and summer, or run last-minute deals. The real question is whether these tactics actually work, because they are usually hand-managed.
Seasonal rates often get set at the start of the year and never reconsidered. Last-minute promotions are thrown together in a panic and eat into your profits. Discounts for certain groups might end up being just a nice gesture that has no real impact on sales.
To make matters worse, pricing decisions are often based on assumptions rather than hard data. Raising or lowering prices without a solid reason usually leads to unpredictable results. And if you sell via travel agencies or online booking platforms, any price change has to be updated everywhere, not just on your own website. This makes frequent price changes too time-consuming and risky.
That is why most health resorts stick to simple seasonal rates. Jivi comes with a basic version of price management based on:
- High and low seasons
- Weekdays, weekends, and holidays
- Specific date ranges for temporary promotions.
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You can define exactly when each season starts or which days count as holidays. But what happens when you take a more precise, revenue-focused approach to pricing?
In our view, the two most reliable guides for adjusting prices are occupancy and RevPAR. The goal is to boost occupancy when demand is low by offering lower rates, and to maximise revenue when demand is high by raising rates on the most popular categories.
Jivi offers several approaches to dynamic pricing, and each one can run automatically based on the rules you set, or in a manual mode where you approve changes first.
1. Pricing Based on Occupancy
With this approach, Jivi looks at how full your room categories are. When occupancy for a category reaches a higher segment, the system suggests or automatically applies a corresponding rate increase. For example, when suites hit 90% occupancy, the rate might go up by 20%.
2. Pricing Based on Revenue Per Available Room
You set a goal, and then define segments based on how much of that goal has been achieved, for example, 0 to 50%, 50 to 100%, and over 100%. Each segment gets its own rate.
3. Combining Occupancy and Revenue Per Available Room
This is the most advanced and flexible approach, where revenue per available room takes priority. If the system does not find a reason to adjust prices based on revenue, it falls back on occupancy.
Important Details
Changes sync to all your channels (Booking.com, Agoda, Expedia, etc.) either automatically on a set schedule or instantly upon your approval.
How far in advance can dynamic pricing go? This depends on your booking window. It may be a week, a month, a season, or even a year.
How do you keep special rates from skewing your data? You can exclude certain market segments from your calculations. If a conference books rooms at a discounted rate, this can spike occupancy and lower revenue per available room, throwing off your algorithm. By excluding these guests, the system keeps focusing on regular demand.
How much does it cost to set up flexible pricing at your health resort? It depends on several parameters. Fill out a short form to find out. As a bonus, you will get a calculation template «7 customer service indicators».