Wednesday, March 3, 2010

Time Pricing

“Using time pricing a firm varies its prices by the season, the month, the day, the hour.” (Kotler, 307) Time pricing is a type of segmented pricing along with product-form pricing and location pricing. Segmented pricing happens when the difference in prices is not based on difference in costs.
Pacific Beach Apartment Rental in California is a classic example of time pricing.

Here is what they have on the Ad:

Low Season Price : $800
High Season Price : $1200 per Week

* Peak Season requires one week minimum, Saturday to Saturday.
* Off season requires 3 night minimum

Off season Nightly Rates:
Weekends (F,S,S) 150.00
Weekdays (M-T) 125.00

Price Table
January 1, 2009 - June 12, 2009 800.00 per week
June 13, 2009 - August 14, 2009 1200.00 per week
August 15, 2009 - December 20, 2009 800.00 per week
December 20, 2009 - January 3, 2010 1200 per week
January 3, 2010 - June 14, 2010 800.00 per week

Prices for this apartment pick during summer months and Christmas Holidays season. They don’t only vary prices, but also vary minimum reservation period requirement. By employing this revenue management they not only take advantage of pick period but also try to spread the demand and ensure some amount of revenue for the whole year.

Elizaveta Koval, Section G

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