Cost-performance ratio can be said to be the foundation for judging a product’s marketability. Let’s quantify the concept of “cost-performance ratio” — this is my own research finding (feel free to copy it. I’m not claiming it’s the truth, and I refuse to debate it). Though people may not say it out loud, they generally accept it. After years of observation and analysis, the relationship between cost and performance can be described as: price equals the square root of performance. Take mobile phones, for example. Mobile phones replaced pagers. When people talk about new products, they expect them to be perfect. At that point, the performance is rated at 10. When the price drops to the square root of 10 — around three times lower — industry replacement occurs. Within the same industry, knockoffs replacing brands (the bad driving out the good) can also serve as evidence. Just take a look at a knockoff product priced just one-third higher than a well-known brand... In a company, if your boss asks you to do twice the work but only gives you a 40% raise (i.e., the salary is equivalent to the square root of 2), you’d still be pretty happy.
At this point, the pricing method becomes very important. The following uses various routes on Green Field (Lvye) as examples to illustrate:
1. Monopoly Pricing Method. Without going into the reasons behind it, the supply is unique. Climbing Mount Everest falls under monopoly pricing. It’s a take-it-or-leave-it fixed price. No one else can do this... On Green Field, there probably aren’t any players as ruthless as this yet.
2. Alliance Pricing Method. A group collectively promotes the same route, with everyone setting the same price. After a certain period, they stop promoting that same route. Once a new route is found, they promote it together. You can see how this works. I won’t analyze the pros and cons...
3. Cost Plus Profit Method. This is the most common approach, no need for further analysis.
4. Comprehensive Comparison Method. This could be called the “follow-the-leader” approach — you set your price based on what others are charging. Aren’t all the one-day itineraries on Green Field like this?
5. Reverse Cost Calculation Method. This is generally used for mature non-one-day routes where prices are available online. In such cases, your quote shouldn’t be higher than the average price. For a hiking route, it should even be cheaper than the lowest price. If your costs are higher than others’ quotes, you have no choice but to give up.
6. Freebies and Discounts Method. This is quite common on Green Field. For example, signing up in a group can get you a discount, or participating in an activity might earn you travel essentials, insurance, etc. The best is when they give out free Red Bull or scarves to everyone. I love this kind...
7. Disassembly and Reorganization Method. A trip often involves multiple segments. Some segments have transparent pricing, while others come with internal rates. By recombining these, you can create your own unique quote. “The whole is greater than the sum of its parts” — here, it refers to the benefits customers receive and the profits you make. One thing to note: the sum of the individual parts should not exceed the overall quote. Unless you’re so famous that you can charge a service fee directly. That approach is still too hard for most people to accept...
8. Ambush Pricing Method. This can be considered the most aggressive of all pricing strategies. You must gain a time and space advantage. Striking about half a month before a market opportunity arises is most appropriate. Directly offering the lowest price among competitors makes others sigh at missed chances. AUX Air Conditioning is a model in this regard. If you act only after others have made their moves, then you’re throwing bricks, not sniping.
I’m just a grassroots operator, so I’ve only written eight tactics. Usually, pricing doesn’t rely on just one method but combines several. When these methods are used together, they can even drive away the Japanese invaders...
A few special reminders:
First, internal control. For commercial routes involving transportation, accommodation, tickets, etc., travel agencies are the biggest users and can largely determine the prices. Therefore, figuring out how to leverage strengths and avoid weaknesses requires serious thought. For example, when I organized an event at Baiyangdian, the driver and the host both asked, “Are you personally bringing people?”
Second, the smile curve. Hiring more people isn’t always better — this is constrained by many factors, mainly transportation. Most commonly used are 35-seat and 55-seat vehicles. Due to price differences, 34 people are more economical than 36. I’ve seen tour leaders recruit 34 people and still push their posts aggressively. I find it amusing... That’s called selling at a loss for the hype.
Third, the last minute. Taking chartered buses as an example again, the fare is 60 yuan per person. When it’s time to depart, there are still five empty seats. Then someone insists on paying only 40 yuan per person. If you accept, it’s pure profit. What do you do? If it were me, I’d definitely accept... Shh, apparently this is the secret to getting ultra-cheap plane tickets.
Fourth, people’s acceptance psychology. Still using my pricing as an example: if I quote 300, I’m a fool; if I quote 298, it’s a budget tour, a bargain; if I quote 308, it’s a luxury tour. People’s thinking often gets stuck on the first digit of a number, unless it’s followed by zeros. Next, if I organize a one-day trip, I might quote 58 yuan per person instead of 60 (don’t steal this trick).
Fifth, the most common market practice is that while you nitpick over every penny, others give you less. In such cases, you have to give something up while enjoying the discount. I’ve seen too many quotes where foreign providers exclude tips. If you don’t give a little tip to the on-site executor (specifically the local guide, if there is one) and start complaining, the outcome is usually not good. Remember, a few dollars can get you many extra benefits. You can always file a complaint later, but is the time and effort worth it? Think it through first.