Advance Booking Discounts

You have probably seen lots of situations where businesses give you a discount for booking in advance. So why do they do this? Are they just giving up revenue? Or is there a real benefit?

Well let’s start with the reasons that businesses might use this strategy.

  • It creates urgency. “If you book by a certain time then you will get this discount”. It forces people to make a decision there and then. Without urgency, people often make no decision at all.
  • It helps the business with planning. The business has a good idea in advance how many customers they will have. This could be useful for working out how many staff or how much food will be required on the day of the event.
  • It can facilitate Dynamic Pricing. The more information you have on past bookings and future capacity, the better you can accurately price on the event day.
  • It gets money in the bank which helps with cash flow.
  • It is a form of Price Discrimination, enabling you to charge more to the less price sensitive customers on the day of the event, and offer a lower cost option to more price sensitive customers
  • You will get paid by some people who, for whatever reason, don’t show up to the event.

The chances are that some or most of these reasons will apply. Which is why, for many businesses, Advance Booking Discounts are a valuable part of their pricing toolkit.

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