In the Trenches: Rethinking Our Pricing Model
Maybe it’s my background setting fares for airlines, but I find myself frequently thinking about our pricing strategy at Cranky Concierge. Although our flat-fee model has served us well so far, I've been wondering whether it will continue to make sense going forward. The big question: Should we charge per person in addition to (or instead of) per direction and itinerary?
When I started the business, I chose a pricing model that would make sense to customers. If we’re monitoring flights and helping out only when something goes wrong, it doesn’t make much difference how many people are traveling. Our effort is the same. So, our initial pricing model was to charge per direction (outbound or inbound) on a single itinerary. It later evolved into a per-direction price for up to four travelers with the same itinerary. When a group is larger than four people, we charge an additional fee, because we do more work (it gets more difficult to find seats, etc.).
For a service like flight monitoring, this works well. But
as the business has grown we’ve started to do a lot of flight planning as well. Specifically, we’ve started booking more small-business travel with the same basic model. But there’s a problem with that approach. It’s called competition.
When travelers book a trip through a travel agent, whether for personal or business reasons, they’re charged a service fee per ticket. We still charge per group of four, which makes our price look high (because prospects see the total vs. the individual price).
For example, when we book two people to fly round-trip from Los Angeles to New York, we charge $60 for planning — and that includes our monitoring service. A travel agent might charge $40 per ticket. At a glance, that appears to be cheaper. But, of course, in reality the total charge is $80 for two tickets, and a travel agent typically doesn’t provide flight monitoring.
So I find myself wondering whether we should switch to per-ticket pricing for flight planning. I’d have to do some market analysis to find the right price, but it would inevitably be less per person than what we charge today. I just wonder if it’s the right thing to do.
What do you think, from both a customer and business-owner point of view?