To yield or not to yield, that is the question.

Yield management, also known as revenue management, is the process of understanding, anticipating and reacting to consumer behavior in order to maximize revenue or profits.

A good yield pricing strategy can have a very positive impact on your business and specifically your bottom line. While yield pricing has been part of the travel industry, specifically hotels and airlines, for a long time it has only recently started to show up in the spa industry. Granted a lot of destination spas and resort spas have been using the strategy for their room not many (if any) have been using it directly for the spa.

If your spa is running at 100% capacity then there is no point to introducing a yield pricing strategy at all, however, if your spa is running below 100% then you should seriously consider this as a viable method to both increase revenue and control costs. A lot of spas have similar issues when it comes to capacity; three to fours days out of seven the spa is in need of more volume. Usually the under performing days are non-weekends and earlier in the week. If your spa is running with a substantial payroll then these underperforming days are greatly affecting your bottom line. If your spa were to offer a different (lower) price for these underperforming days it’s very likely that you would start to attract a new consumer to your spa.

Who is this consumer you ask? It’s more likely going to be someone who is a little more price conscience then your usual customer but that should not be treated as a negative. Think about it; firstly, this customer is coming to your spa when normally they would not have and most likely visited a competitor’s location. Secondly this customer is bringing positive cash flow to your spa. Yes, its going to deliver a lower profit margin, but, in actuality its going to make your capacity days more profitable as your overhead will remain constant. Finally, a new loyal customer is always a gateway to more customers and we all know the benefit of that.

A yield pricing strategy is not discounting, or special pricing, its exactly as it says “Yield”. Top brands like Four Seasons, Fairmont and Mandarin all support a yield pricing strategy and so should you.