Should Disney Use Surge Pricing? One Expert Says “Yes”
Surge pricing isn’t uncommon in the live entertainment business. But theme parks, Disney’s in particular, haven’t really experimented with the idea much. However, on the heels of their recent price increases, there’s another rumor that Disney may opt for surge pricing. Harvard Business Review’s writer Rafi Mohammed said, “The rumored pricing plan involves offering Gold ($115), Silver ($105), and Bronze ($99) ticket options that are priced based on anticipated demand. Gold would be good for admission any day of the week; Silver ($105) would be for off-peak weekdays and weekends; Bronze ($99) would get you in on select off-peak weekends.”
Mohammed thinks this is a great way for Disney to make “free money” and could even enhance the customer’s experience and bring in otherwise “dormant” customers.
Back when Disney first announced price increases at its Disneyland park, Jim had a similar thought. He pointed out that while the move obviously makes Disney more money, it also could create a better experience, by limiting the amount of parkgoers and thereby cutting down line times and crowds. As he said in his earlier post, Disney’s Price Increase: A Customer Service Move?:
“Theoretically, they maximize their ‘revenue per seat’ by selling up to the legal capacity limit every single day, but unlike in live entertainment (theater, music, sports, etc.), the quality of the experience plummets when more people are there. …
The basic problem they face is that attendance is up, despite price increases, and so more and more of the time, the park is packed, creating a less-than-magical experience of the product.
In a sense, it’s the same reason a theater would improve the seats or remove a row. You slightly reduce revenue potential in the short term, but you improve the experience enough to compensate in the medium and long term.
I don’t know the inner-workings of Disney, but I do know they think about customers and their experience, and I do know they understand how to manage park capacities.”