Zoftify

Glossary

Dynamic pricing

Dynamic pricing

Related terms

Dynamic pricing in travel is a revenue management strategy where the prices of services like flights, hotels, or tours change based on factors like demand, time of booking, and market conditions. This means prices can go up when demand is high (like during holidays) or drop when demand is low, allowing travel companies to maximize their revenue and stay competitive.

This pricing strategy uses algorithms that consider various elements to set the right prices. Key factors include:

  • Demand and supply: As more people book flights or hotels, prices increase. Fewer bookings might lead to lower prices.
  • Competitor pricing: Companies adjust their rates based on what others in the market are charging.
  • Customer data: Historical data on customer preferences and behaviors can influence pricing adjustments.
  • External events: Major events or changes in weather can also affect pricing.

By constantly adjusting prices based on these factors, travel companies can attract more customers and increase sales efficiently.