Pricing strategies in any business can be like a form of sorcery. A little hocus-pocus and abracadabra, and, poof!—appearing in some magic bubble are a set of numbers to determine an optimal pricing scheme. Unfortunately, there is no single, golden pricing rule guaranteed to maximize revenues. Under its “pricing strategies” heading, Wikipedia lists at least 22 possible methodologies, finishing off its list with “other strategies.” The many permutations of pricing possibility are truly innumerable.

Pricing strategies are further complicated by the fundamental variables that apply to any particular industry, which is why lift-ticket pricing and, say, new-car pricing have very little in common. And those complications are now being newly contorted by electronic technology. With the Internet, mobile apps, and radio-frequency ID all coming into play, it is fair to say that lift-ticket pricing schemes of the not-too-distant future, driven by the possibilities presented by those new technologies, are likely to be different—perhaps dramatically different—from what they are today.

Still, any pricing strategy has to address the needs of resorts. Allison Kingsley, a professor of management at the University of Vermont’s School of Business Administration, says that ski resorts “have high fixed costs, and they need (pricing) strategies to cover those costs. You need a predictable revenue base.”

Day Tickets, Season’s Passes
While the fundamental objective of any pricing strategy is to maximize revenue, the first and most important revenue hurdle for a mountain resort to clear is covering those fixed costs. Kingsley says that season-ticket sales should provide a big boost to clearing that hurdle, and should be priced to produce a healthy pre-season revenue stream.

The traditional mountain resort ticket-pricing matrix begins, of course, with a single-day, walk-up price, usually sup­­plemented by an afternoon price, multi-day discounts, and package discounts, as well as season-pass pricing. That theme or a variation of it remains, for the most part, the ticket-pricing foundation at essentially all resorts.

But in the last few years, largely enabled by electronic technology, a number of resorts have been re-working that basic matrix, often assisted by such on-line services as Liftopia, Inntopia and Getskitickets.com.

Companies like Liftopia, which partners with approximately 80 resorts in North America, are promoting a concept called dynamic ticket pricing. The concept involves “pricing (ticket) inventory based on the demand on any given day,” says Evan Reece, Liftopia’s CEO.

While a simple form of that ticket-pricing concept has long existed at most ski areas—e.g., lower-priced mid-week tickets, higher-priced holiday-period tickets—dynamic pricing can pinpoint demand for a particular day or week based on historical data, and set ticket prices accordingly. Reece says this sort of pricing methodology has been in play for a while in the hotel industry, which uses historical occupancy rates as the principal metric to establish a room rate for any given time.

The result, says Brandon Quinn of Getskitickets.com, which partners with more than 35 resorts, is “a really varied ticket market.” If the historical data so dictates, for example, the price of a ticket on January 6 might be five dollars lower than the price on January 2.

According to Quinn, the data on which to base the price for any given day might not be just historical visitation numbers, but also such variables as historical weather patterns and local competitors’ pricing. As data continues to be collected electronically, pricing variations should correspondingly become that much more precise.

Promoting Advance Purchase
Another principal component of the dynamic-pricing strategy is the effort to push consumers to buy tickets earlier, similar to advanced-purchase strategies that have been fundamental to airline ticketing for a long time. (Resorts should move carefully in this direction, though; customers have a love-hate relationship with this model.) According to Reece, the traditional pricing matrix amounts to an equivalent of “selling all plane tickets at the airport.” But change is coming. Quinn believes that “resorts are doing a better job of getting people to buy tickets in advance.”

Liftopia’s advanced-purchase concept, says Reece, might produce as many as 15 prices for any particular day, based on how far in advance a ticket is purchased. What the mountain resort industry needs to nurture, he says, is a mindset among consumers that “you should buy now, or the price will go up.” Or at least, could go up.

Two metrics that have been used for some time by resorts in establishing prices are total visitation and revenue yield per visit. While these numbers continue to carry important weight in pricing, Reece believes resorts still have a long way to go in building a software infrastructure to take full advantage of e-commerce potential. “The next wave—and the prime driver of growth—is for resorts to become as sophisticated in their software technology as their hardware (snowmaking, grooming, lifts) technology.”

That, of course, is where a service like Liftopia steps in, with its e-commerce software expertise.

A second reason to partner with an on-line service, says Mike Bisner, a long-time ski-industry consultant, is that it enables a resort “to market to a whole new group. A resort is not restricted by its own data base.” Maximizing revenues is a matter of finding the perfect nexus between ticket price and visitation volume, and reaching a larger customer base clearly represents an opportunity for growth on the volume side of the equation.

Technologically Speaking
Whether engaged in an on-line dynamic-pricing partnership or not, resorts still base the vast majority of their ticket sales on the traditional day-ticket model. With the proliferation of radio-frequency ID systems and mobile communications, however, that may be changing. RFID opens up various possibilities, such as hourly ticket rates, per-lift-ride rates, frequent-skier discounts, and others.

According to Bisner, who has helped several resorts in the implementation of new RFID systems, the gateway to a host of different pricing possibilities will open as “resorts adopt all sorts of new technology.” Yet, surprisingly, most resorts that are now RFID-equipped have barely budged in this direction so far. Mont St. Sauveur in Québec, which recently installed an RFID system, began last winter to offer tickets based on four-hour time blocks, a strategy that reportedly has been very successful.

On the other hand, after installing an RFID system more than a decade ago, Attitash, N.H., quickly abandoned a per-lift-ride pricing method after determining that it was simply not profitable. While the viability of per-ride pricing remains to be fully tested, Kingsley warns of “a danger in getting too smart” in any pay-as-you-go scheme, which might run the risk of losing control of revenue predictability.

Another recent trend in ticket pricing is what Kingsley calls “the cartel model,” with several resorts, usually within the same region, joining forces to offer multi-resort ticket deals. “It is definitely growing,” says Quinn, effectively reducing the pressure of pricing competition among neighboring resorts.

While that might work well for those resorts within any particular consortium, those on the outside looking in might be at a disadvantage. “The small players are going to find it hard to compete,” says Kingsley.

E-Commerce is Coming
It goes without saying that the last decade has seen an explosion of e-commerce, and it is an arena in which mountain resorts, assisted at least in part by their on-line retailing partners, will increasingly find themselves playing. By using an on-line dynamic-pricing strategy, allowing real-time, on-the-fly adjustments to ticket prices, resorts might be able to move closer to the golden ideal of maximizing revenue.

But there are potential perils as well. E-commerce is a world that gives consumers quick and easy ways to compare prices and shop accordingly. In theory, says Kingsley, “the more buyers have power, the more price goes to cost. The ski industry (with its need for a predictable revenue base) can’t afford that.”

E-commerce, dynamic pricing, and cartel model are not terms mentioned under Wikipedia’s pricing strategy heading, and that is probably some indication of how fluid the concept of pricing, and technology, have become. In theory, there is a perfect price for every product, at any particular time—including lift tickets. The challenge, given all the variables that come into play for any particular business, is, of course, finding it.