What is Dynamic Pricing?

Dynamic pricing — the once elusive term that has recently become one of the campground industry’s hottest topics — is much less mysterious than you may think. Hotels, airlines, restaurants, and other hospitality sectors have capitalized on demand-based and time-specific pricing for years. While our industry at large lags behind, Campspot makes it easy to test and explore the many bottom line benefits of using dynamic pricing at your own pace with minimal training, time, and effort. First, let’s define and demystify this term.

Define & Demystify

Dynamic pricing is the strategy of adjusting the selling price of something based on demand and time. At its core, the goal of dynamic pricing for campground owners is to maximize the amount you could charge for any given site on any given day based on the current supply and demand. Odds are, you are already taking advantage of a simple version of this strategy without even knowing it. Next, we will debunk some common myths about dynamic pricing.

Myth: I’ve never used dynamic pricing before at my campground.
Truth: Most parks already use dynamic pricing without realizing it.

Do you offer different rates for holidays, during your high and low seasons, or over weekends versus weekdays? If so, you’re using dynamic pricing. With Campspot’s dynamic pricing engine, you can take your strategy to the next level by adjusting pricing based on your real-time occupancy and how far in advance guests are booking. This ensures that you’re getting the most value out of each and every site you offer.

Myth: Dynamic pricing is always an increase in what I’m charging.
Truth: Dynamic pricing is simply an attempt to match your rate with the demand coming from your customers – whether increasing or decreasing.

Your overall goal as a business is to drive revenue. If you’re in the off-season and an upcoming weekend is looking sparse, would you rather charge your normal off-season rate and get one or two more last minute reservations? Or, could you drop your price by five dollars last minute and encourage a few extra bookings that you wouldn’t have otherwise? Long story short, demand for what you offer can go up or down on a whim. To generate the most revenue possible, your rates should fluctuate, too.

Myth: Dynamic pricing means I’m trying to nickel and dime my customers.
Truth: It’s impossible to perfectly predict demand ahead of time, and dynamic pricing makes up for that.

When setting your base rates, you can’t account for the weather, gas prices, or any number of infinite variables that may fluctuate demand. However, setting up dynamic pricing can help you capitalize on multiple opportunities as they arise, despite fluctuations. Consider the scenario of a campground that sells out its holiday weekend occupancy two months in advance, while charging $50 per night for water/electric sites. In this example, that campground is missing out on two months of people looking for availability at their property who would have potentially paid $70 a night or more given their demand. Therefore, the people who would have placed a higher value on the experience of staying at this park are missing the opportunity, while the park also loses out on a significant amount of revenue.

Myth: I make the most money possible by ensuring my campground is booked at 100% occupancy.
Truth: Selling out may mean you weren’t charging enough. You will actually make the most money by identifying the amount someone is willing to pay for what you offer.

This comes with a caveat: If you sell out at the last minute, perfect – you did dynamic pricing right. To illustrate this, let’s use a simple hypothetical example. Take two identical parks with 50 sites each, charging a nightly base rate of $100.

  • Campground A with Static Pricing: For an upcoming 4-night holiday weekend, they sell out 100% a month in advance. Total revenue = $20,000
  • Campground B with Dynamic Pricing: After achieving 50% occupancy for an upcoming 4-night holiday weekend, they increase their rate for every additional 10% occupied and end up at 95% occupancy. Total revenue = $21,500

In this case, the campground using dynamic pricing has made $1,500 more, despite not selling out. They also still have the opportunity to fill their remaining spaces for last-minute campers at a premium price. Repeat this example over the course of an entire camping season and you can see a dramatic increase in revenue.

Myth: Dynamic pricing is a one-time on/off switch that I don’t have control over.
Truth: Campspot’s dynamic pricing feature is a flexible opportunity that allows you to approach it in whichever way you choose.

Our software was built with intelligent reservation design, including our dynamic pricing feature. As a software administrator, you have complete control over customizing your business rules and testing rate variations at your leisure. Because our dynamic pricing feature is not just occupancy triggered, you can set your park’s rate strategy based on site type as well.

Parks that utilize dynamic pricing within our software have a long list of variables, options, and tools at their disposal; with the most important being their dedicated Campspot Account Manager. Whether it’s limiting dynamic pricing to certain weekends or site types, monitoring your occupancy to provide recommendations, or simply tweaking your strategy on a regular basis, our team will help you craft the best strategy for your business.

Time to Try Dynamic Pricing

Why hasn’t dynamic pricing been as widely used within the campground management industry as within other hospitality sectors? To start, it’s understandable why you and many other campground owners may feel hesitant to employ this tactic. However, know that so long as the demand exists (up or down), this practice is normal. Consumers are often eager to pay a premium for the quality, specificity, and guarantee they receive — such as our optional lock site fee, but we’ll save that explanation for another post. We hope our myth debunking has helped prove this fact and enticed you to try a new rate strategy at your campground!

To see this feature and more in action, contact our sales team for a free demo at sales@campspot.com or call 616-226-5500.


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