What Is Demand Pricing?
Although demand pricing might not be a term that you recognize immediately, it is a concept that you are quite familiar with. Gas prices fluctuate daily, as do stocks, and even the market price of fish and meats. Airlines will frequently change pricing on remaining seats to either fill an empty plane or maximize their profits on a flight that is selling out quickly.
In general, demand pricing is a direct reaction to the law of supply and demand. As emerging technologies allow business owners and operators to analyze market demand quickly, the ability to adjust pricing needs to be just as instantaneous. Where many other businesses—such as taxis, concert ticket sales, and ride-sharing apps—were early adopters of this new tech, the parking industry is in a rut with static signage and hastily revised sandwich board
“No one wants to pay Friday night rates for Tuesday afternoon parking.”
FlashParking offers a comprehensive suite of parking management solutions that put powerful cloud-computing technology into the hands of parking asset owners, allowing once static lots to become dynamic, high-revenue ventures.
Demand Parking Is Mutually Beneficial
Real-time pricing is often considered the most effective form of demand pricing, as faster response times lead to tighter cost-to-price ratios. In other words, customers rarely pay more or less than the perceived value of the service at any given time, which helps with loyalty and retention. It’s been shown that demand pricing programs have the potential to increase customer engagement. They can build more meaningful relationships through trust and the feeling of value received.
Rates during peak times can be remotely raised to generate the maximum revenue from your asset when demand is high. Rates during quieter periods, when a lot might have been historically empty, can be automatically lowered to encourage more use. In theory, utilizing pricing strategies significantly reduces periods of inactivity to capture the highest possible revenue at all times.
FlashOS enables asset owners to adjust pricing based on actual demand and usage. These real-time changes provide an opportunity for customers to reduce their parking expenses by choosing to travel and park during off-peak periods.
What Is a Static Rate?
A static rate is a single price commonly based on the estimated or competitive value when compared with surrounding or like businesses. Although static rates are the easiest for parking asset owners to implement, they are rarely the most accurate. And they can often keep owners from capitalizing on surge pricing during peak days and times. This model can also have unintended adverse effects on the relationship between parking lots and customers. No one wants to pay Friday night rates for Tuesday afternoon parking.
Where demand pricing exploits new revenue opportunities during both peak and off-peak periods, static pricing’s structure is only ever maximized during a small window when the price aligns with demand—significantly reducing the overall profit potential for your business.
Technology Is Leading The Way to Better Manage Pricing Strategies
FModern technology is empowering parking asset owners in unique ways. Business analytics and intelligence and cloud-based software mean that real-time data can be used to maintain a highly-competitive and sustainable business. For example, if there is a transit strike downtown, commuters will be forced to drive and park their cars in what will undoubtedly be overcrowded lots. As soon as your parking management system discovers the rise in usage, owners can remotely raise prices to capitalize on the opportunity. Later, as demand wanes, rates can be reduced back to their previous state—all without ever stepping foot in the physical parking lot or structure.
“The ability to see, react, control, and manage prices through cloud-based business intelligence system is one of the most powerful tools in parking technology today.”
Demand pricing doesn’t always have to be so spontaneous, either. If parking lot managers know that a profitable event is coming up in the future, they can plan pricing increases in advance to capture the maximum potential revenue. The ability to see, react, control, and manage prices is one of the most powerful tools in parking technology today. A cloud-based system gives you the ability to look at data from a multi-site or single-site perspective to better understand trends and patterns that may affect pricing strategies.
What Are Other Forms of Demand Pricing?
Parking is a unique industry in that its format applies to many different uses. Unlike a concert ticket, which grants the holder admittance to one specific event on one specific day at one specific time, a parking lot can be many things to many people. If a parking lot manager notices excess availability even after rates have been lowered through demand pricing, business intelligence enables the repurposing of dormant areas by transforming the lot into a virtual mobility hub.
“When your garage can do more than merely stage parked cars, there is no such thing as a slow day.”
By enabling alternatives to traditional space use through added functionality—such as ride-share pick-up and drop-off points or eScooter parking—you can maximizes every inch of your parking asset at all times. Rationalizing sporadic occupancy drops as “slow days” is the old mentality. When your garage can do more than merely stage parked cars, there is no such thing as a slow day.
How Does Demand Pricing Affect Pricing Strategy?
Most parking strategies are based on one of three common practices: profit maximization, sales maximization, or gaining market share. The benefit of a cloud-based management system is that all three of these practices are possible, often simultaneously. By capturing revenue during peak, off-peak and regular periods, profit maximization is always in action at the core of dynamic pricing. Simultaneously, sales are also maximized regardless of profit through the utilization of every possible revenue channel, including non-parking income. Lastly, by offering your parking asset as a mobility hub to serve the community in many diverse ways, you can position your lots as cornerstones of the urban commute.
“By enabling alternatives to traditional space use through added functionality—such as ride-share pick-up and drop-off points or eScooter parking—you can maximize every inch of your parking asset at all times.”
Constant, Flexible, and Sustainable
The parking industry no longer needs to abide by the feast or famine mentality, where it’s a given that there will be good days and bad. It might seem odd to think of a huge slab of concrete as flexible, but when your asset is equipped with the tools needed to maintain elasticity through intelligent hardware integration, the potential for growth and success is virtually limitless.
And FlashParking offers an industry-leading solution that connects technology and consumer behavior in a meaningful way to ensure that your revenue streams are constant, flexible, and sustainable.
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