It is time to raise your price when your costs are climbing, your margin is thinning, and you have not touched your number in a while. The way to do it without losing guests is to understand the unique value you deliver and sell that value, not a list of services. Do that and you protect your margin instead of quietly giving it away.
There is no doubt about it. As supply chains tightened and a hot labor market drove up wages, the economy moved through an inflationary period felt in nearly every sector. Your vendors are raising their prices, online travel agencies are increasing their fees, and you are feeling the squeeze.
After going through the most disruptive period in the living memory of this industry, it can feel counterintuitive to think about raising your prices right when guests are starting to return. You may find yourself in a reactionary posture, doing everything you can to keep from passing rising costs onto your guests. The results are lower wages for an already scarce workforce, a skinnier tour product, and less profit in your pocket.
Eventually you have to accept that inflation is a fact and prices everywhere are going up. You need a dynamic strategy that carries you through this transition, lets you raise your prices, increases your margins, and grows your business.
The solution lies in understanding the unique value you bring to your guests. That value is defined by the problem you solve for them with your tour. To figure out your unique value, you need a clear understanding of your guest and the problem they need you to solve. Once you understand the unique value of the experience you offer, you have a clearer idea of what someone expects to pay.
Sell value, not services
Plenty goes into pricing your tour. You have to account for your cost of goods sold, how much you pay your guides, and company overhead, plus the small matter of profit margin. But set those concerns aside for a minute and look at pricing from your guest's point of view.
Your guest has no idea what goes into putting together an amazing experience. All they see is the end result. When they are looking at buying a ticket, they form an expectation of what they will get for the price they are paying. In other words, the price of your tour should reflect your guests' perceived value of the experience they expect to have. When you can better align your value with those expectations, you have an opportunity to successfully raise your prices.
You can try to use industry benchmarks to position your tour, but the truth is your tour is too unique to let other tours determine your pricing. It comes down to understanding your unique value to your specific guest. This is what allows multiple tours to thrive together in the same market. They each understand who they serve best, and they are not both competing for the entire pool of potential guests.
A guest who books because you were the cheapest leaves the moment someone cheaper shows up. A guest who books because of the value you deliver stays, tells friends, and does not blink at the price.
Your unique value
To meet your guests' expectations and determine the value of your tour, you need to understand who they are and what problem your tour solves for them.
Many of my clients first come to me having been told their value comes from an understanding of their purpose, their mission, and their core values. They spend more time thinking about their own identity, and not enough thinking about the identity of their customers. When they get around to thinking about their market, they use outdated methods to define a broad buyer persona or a generalized target market.
I have developed a much faster path through that process. The best way to discover the specific problem you solve for your guests, and to arrive at your true unique value, is to create a profile of your One Target Customer.
Your One Target Customer
To define your One Target Customer, I take clients through a process of imagining, in detail, a real person with a real problem you can solve, someone very much like the guests who have already booked your tour in the past. This is the person most likely to convert to a paying customer when they visit your site.
Once you have identified your One Target Customer, you can work out how your tour solves their problem. This is how you arrive at your Unique Value Proposition, the first sentences on your website that speak directly to the value your tour brings to your target customer.
Identifying your One Target Customer sits at the core of this marketing philosophy. Using your target customer to shape your Unique Value Proposition is only the beginning. Knowing what your product is worth to them, based on the value you provide, is the best way to properly price your tour.
Add value
Once you have identified your One Target Customer, you may make changes to the tour to better solve their problem. Maybe you add a new stop or a photo-op at a fun mural, things that are free or low-cost to you but increase the perceived value to your guest. The more value you can add, the more leeway you have with your pricing.
When you understand the unique value of your experience, you can better understand what someone expects to pay. It is when you reach this level of product and market fit that things start to align. More customers come in the door because they finally understand what you have been trying to tell them all along, why they should choose your tour instead of finding other solutions to their problem.
Let data be your guide
Once you have determined who your target customer is and your unique value in solving their problem, it is time to set a value-based price. Knowing the costs associated with your product matters, but that will only get you in the ballpark. So how do you know how much to charge, a number that gives your guests the value they expect while letting you grow your profits?
The short answer is to test it. You need data to make decisions. I have helped clients gather this kind of data in a number of ways. Here are a few examples:
- Increase your prices 20 percent, then test your click-through and conversion rates. If the same number or more people are clicking and buying, you may even have room to raise your prices further.
- Add a more expensive, premium tour to your site that costs more than your highest-grossing tour. Putting the tour you most want to sell in the middle of your pricing makes it appear the most affordable for the value it offers.
- Rearrange the order of the tours on your site to list the most expensive tour first, then test whether it increases sales of your mid-priced tour by letting someone compare the perceived value of your experiences.
- Write a description of a new experience aimed directly at your target customer, and test how many clicks it gets. Since the tour does not exist yet, when a person clicks purchase they are greeted by a screen apologizing and letting them know the tour is not yet available. They receive a 15 percent off coupon that redirects to your available offerings, and a chance to enter their email to be kept up to date on availability.
- Have your guides survey guests during the tour to see what people think about pricing and new tour offerings.
- Use your email newsletter to ask questions, gather responses, and increase customer engagement all at the same time.
- Use your Digital Guidebook to prompt guests with questions about new experiences they would be willing to pay for.
By making data-informed decisions, you will not need to guess whether your customers will like a new tour or keep booking at higher prices. You will already know the answer, because you will have the data to prove it.
Corporate groups make this easier
If pricing on value feels abstract with individual guests, corporate and private groups make it concrete. A group perceives and pays for far more than a seat on a tour. The buyer is solving a bigger problem: rewarding a team, entertaining clients, and looking organized in front of leadership. That is a higher-value problem, so it carries a higher price without resistance.
Groups are the clearest place to practice charging for value instead of services, because the value is so obviously larger than the tour itself. If you want the mechanics of it, see how to price corporate and private group tours, where I walk through minimums, margins, and pricing for the outcome the buyer feels.
Frequently asked questions
How do I know when to raise my tour prices?
Raise your prices when your costs are rising, your margin is thinning, and you have not updated your number in a while. If your vendor, venue, food, and platform costs have climbed while your price stayed flat, you are absorbing the difference out of your own profit. Those three signals showing up together mean a raise is overdue.
Will raising prices scare away customers?
Not if you sell value instead of services. Guests who book only because you are the cheapest will leave the moment someone cheaper appears, but guests who book for the value you deliver stay and refer others. When you frame the price around the problem you solve rather than a list of features, a higher number reads as fair rather than steep.
How much should I raise my prices?
Work from your costs and the value you deliver, not a round number. Cover your rising costs first, restore the margin you have lost, and then price for the outcome the guest actually wants. Understanding what your guest expects to pay for that outcome gives you a clearer ceiling than simply matching a competitor.
How do I justify a higher price?
Justify it with value, not volume. Instead of adding more stops or tastings to defend the number, name the problem you solve for the guest and price on that. A well-organized, memorable experience that removes all the guesswork is worth more than the sum of its parts, and corporate or private groups feel that value most of all.
Want help pricing your tours?
I help operators price for the value they deliver so their margins hold as costs climb. Let us talk about your tour.
Book a brainstorm call