Merchant Innovation

Dynamic Pricing Gets Lift At Ski Resorts

Want to head out to Wachusett for a couple more runs before all that snow melts? It might be worth buying that lift ticket today when it will be cheaper thanks to Liftopia’s dynamic pricing model for ski lifts, according to Bloomberg.

Liftopia is a San Francisco based startup that takes the concept of dynamic pricing, which adjusts prices like a “moving target” depending on circumstances such as time and location proximity, and applies it to ski lifts. According to co-founder Evan Reece, dynamic pricing can help clear up inefficiencies in labor and travel by helping to spread around ski traffic depending on when people decide to go on vacations or mountain conditions.

Customers can either buy tickets through Liftopia, or at ski resorts that have Liftopia’s e-commerce widget embedded into their system. As of this year, Liftopia sells tickets for over 250 resorts in the U.S. and Canada, including Wachusett, with around 100 resorts using the built-in widget for their own sites. For resorts, it’s a way of insuring against weather changes that can lead to abrupt cancellations like rain and drought, which according to Bloomberg forced some California ski resorts to shut down.

So far, the company has raised $7.9 million from venture capital firms, with most of the money going toward developing a model based on “both transactional e-commerce and hotel-style yield management,” according to Erik Blachford, an investor who serves on Liftopia’s board. Reece also expects to turn a profit in two years, raising revenue from charging 12 percent commissions on tickets purchased on their site or 5 percent from resort sites.

Liftopia’s main rival in this space is GetSkiTickets.com, which drops prices on lift tickets as the dates get closer rather than raising them as Liftopia does, which according to economist Andrew Sweeting is more efficient, but might give the impression of an “unfair market” to some customers.

Dynamic pricing is an increasingly common way to increase margins and reduce inefficiencies for online companies, particularly in travel and hospitality. Increasingly though, dynamic pricing is being applied in the retail space as a way of targeting specific customers in certain situations. Investors are also looking into startups that are being set up to help companies use dynamic pricing as a way of meeting specific corporate goals aside from profit margins.

 

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