Increase spa profits with dynamic pricing. Where to start

dynamic pricing

In order to generate more profit in spas, we need a more strategic approach. Here’s how dynamic pricing works and how to get started. 


By Suzanne Holbrook,
Senior Corporate Director, Spa & Wellness Operations
Marriott International

Revenue is always top of mind in any business. In order to generate more profit in spas, we need a more strategic approach, comparable to the way revenue management is applied to hotel rooms.

Dynamic pricing, also known as yield management, has become a part of our everyday lives. We’ve come to expect pricing for airline seats, hotel reservations, and theatre tickets to fluctuate with the time of year and even the time of day. These price changes change in response to market factors like demand or competition. This is the basic principle of supply and demand.

The spa industry is beginning to understand how effective these pricing strategies can be and how our industry can benefit from implementing a yield management strategy.

Spas frequently offer discounts to fill empty treatment rooms but this, unfortunately, is more of a short-term solution. Over a longer term, discounting can negatively impact the perceived value of your brand and consumers will want regular access to these discounted prices. Rather than take this route, consider a more nuanced revenue management strategy.

In a simple example, someone who wants a treatment on a Saturday may pay a higher price versus a Tuesday morning.

To achieve the best possible financial results, however, we must implement menu engineering. This means identifying which treatments give us the highest profit margins, and once you have dissected the treatment menu, you can start planning what services to offer during peak hours. Offer the treatment(s) with the highest margin, such as massage, during high demand times.

Yield technique is known as dynamic availability and is an effective approach to increase profit by offering higher-margin treatments during peak hours. This way a spa can increase its overall profit margin quite easily without significant changes.

So, here is another example: In a spa that has a strong demand on weekends, lower profit services, such as waxing, should not be available.

Tips for implementing a successful yield management strategy

First things include defining your key performance indicators to help understand the patterns of demand. This will help identify when and where to make changes.

Implementing a successful revenue management strategy also demands that you have the full support from your entire spa team, along with support from executive management, particularly your Director of Finance.

Have a comprehensive strategy, and that your team members are trained before rolling out. Be sure to:

  • Train all your team prior to implementing yield management and get their buy-in
  • Ensure the books are balanced for providers during peak periods
  • Communicate the price difference to your guests
  • Educate everyone at your property on the strategy

Also, cover all your bases and communicate your strategy through all of the following.

  • In-spa marketing
  • Property marketing
  • Online booking
  • Spa menu
  • Website
  • Local marketing

Last and not least! Ensure the experience is worth the higher cost, that amenities are open and inviting and that you have great food and beverage offerings. You may also offer additional complimentary experiences such as, aromatherapy heated neck pillows, personal tea service, and complimentary mini treatments while in the lounge (working with vendor partners).

Above all, nothing can make a guest feel their money was well spent more than ensuring they receive exceptional anticipatory service!

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