By Andy Zipser
Andy and his family are the owners and operators of the Walnut Hills Campground and RV Park in Staunton, Virginia.
One of the hardest questions we get, as campground owners, is the deceptively simple query, “What’s it cost to camp at your park?”
You’d think the response would be pretty straightforward. You ask a grocer how much a pound of chopped beef costs and you get an uncomplicated answer. A lot of products have prices stamped right on them, movie theaters list ticket prices over the register and a magazine subscription costs a precise amount, even after all the alleged discounting that shows how much you’ve “saved” over the newsstand price. Unlike bazaar economies, in which prices are fluid and haggling is a consumer sport, for the most part we’re used to having fixed prices for fixed goods.
Yet more than most other commodities, campground sites are not all equal — at least not in an RV park like ours, which is hardly a cookie-cutter operation. Our rate sheet has 20 different horizontal RV categories, divided by six vertical time columns — and that’s a simplification from the 15 columns we inherited six years ago when we bought the park.
Do you want just water and electric, or do you need full hook-up? 30 amp okay, or do you need 50? Pull-through or back-in? Are you reserving during our “summer” season (which now runs into mid-November, but that’s another story) or winter, and will you be staying on a weekday or a weekend night? And on and on.
Experienced campers know all this, but it’s not unusual for new owners — or RVers more used to newer parks, in which every site is pretty much like every other — to heave a sigh of frustration when we answer their question with, “Well, it depends.” I’ve learned to blunt the vagueness by replying, “Our prices range between $34 and $68, depending on what you want,” but even that can be off-putting for those who want a definitive answer.
SO HERE’S THE BAD NEWS: What I’ve just described is going to get worse. Attend any get-together of RV park owners, like the recent national conventions held by ARVC and KOA or one of the numerous state association meetings, and you’re bound to hear the phrase “demand-pricing” (or “dynamic pricing”). All the computerized reservations systems that now pervade the industry have algorithms that make it possible, numerous workshops explain why it’s time for campgrounds to get rid of their fixed-price sheets, and demand-pricing advocates hammer at the fact that those of us running campgrounds are 20 years behind the times. Get with it!
Indeed, demand-pricing is far more prevalent than many people may realize. Consider airlines and hotels, whose customers have come to accept that prices will vary according to supply and demand. Plan far ahead and you’ll get one price. Wait too long, and the price will be higher because supply is more limited. Make a last-minute decision and possibly score a great deal, as the seller tries to move excess inventory — or find there’s nothing to be had, at any price. On the plus side, the upshot is more bookings and more cash flow to the seller. The flip side? That guy in the aisle seat next to you may have paid a fraction of what you coughed up for the exact same service.
But demand-pricing is also evident in ticket scalping, at one extreme, and in the way Amazon undercuts competitors at the other. Scalping is generally regarded as predatory, even though no one is forced to buy a ticket at exorbitant prices. Amazon, meanwhile, which adjusts its prices non-stop, has created the perception that it has the lowest prices on the web. The reality, according to an analysis by Boomerang Commerce, a dynamic pricing company, is that Amazon’s “consistently low prices on the highest viewed and best-selling items drive a perception among consumers that Amazon has the best prices overall.” Which, we should note, it does not — so is it any less predatory than the scalpers?
Is that “fair”? Is it good customer relations? Does it matter?
The reality is that demand-pricing, assisted by the wizardry of computerized algorithms, simply is a more sophisticated approach to finding the highest price that consumers are willing to pay. We already do that on a more primitive level with our complicated pricing grid, increasing our rates a couple of bucks on the weekends, and a couple more on holidays — and even then we’ll sell out on Labor Day or the Fourth of July, raising the question of whether we should have increased them even more.
Dynamic pricing can be viewed as simply a smarter approach to what we — and most of the campground industry — are already doing. And yet. . . .
And yet, there has been a lot of resistance among most campground owners against embracing this kind of pricing scheme. It does not, in fact, seem “fair.” Holding up the airline industry as an exemplar of how it works is hardly convincing to many of us, given the dread with which most people contemplate the hassles of flying. Unlike airlines or hotels, most campgrounds have had a more personal relationship with their customers and frequently enjoy repeat business because of it. Dynamic pricing may be okay for high-volume travel or hospitality industries, but RV camping historically has been more rooted in value-based pricing, in which the price campers pay should make them feel they’re getting a lot for their money.
That may sound like good news from an RVer’s perspective, but the reality also is that this resistance is fading. It’s hard to ignore the lure of higher revenues that demand-pricing promises to generate. The ongoing flood of new RVs — a recent slowdown notwithstanding— means increasing demand for a supply of campground sites that is growing only slowly, if at all. The greater spread of demand pricing throughout the economy, helped along by the same forces that gave rise to Uber and teleworking, means growing (if grudging) acceptance by the consuming public.
So here’s my prediction: Demand pricing is coming. Maybe not right away and not everywhere, but soon and ever more widely. And that means asking “What’s it cost to camp at your park?” will become as meaningless as asking “What’s it cost to book a seat on one of your airplanes?”