The End of Rack Rate? Dynamic Pricing in the Golf Industry

By: Linda Quinde July 30, 2013

Two weeks ago I promised you that I will ask Linda Quinde, Executive Vice President of Operations at to share with us what do they think about the dynamic pricing model and how they want to incorporate it into their software.

We’re hearing a lot of talk about “Dynamic Pricing” in the golf industry these days. While Dynamic Pricing is a common practice in many industries, it is relatively new to golf, and leaving many to ask, “What, exactly, is Dynamic Pricing?”

Dynamic Pricing is simply the pricing of a product or service based on real-time supply and demand factors. For example: a bottle of ice water may be worth $5 if it is 100 degrees outside, but only $1 if it’s 40 degrees.

EzLinks Dynamic Pricing

However, that same bottle of water may be worth even less on a 100-degree day if you have 1,000 bottles in stock and a cold front or rainstorm is heading your way. Pricing a product based on real-time supply and demand factors maximizes value for businesses and charges consumers a fair price based on current conditions. Whether talking about a bottle of water or a tee time, market conditions can greatly influence the value of a product or service.

Businesses typically trigger dynamic pricing through two distinct steps:

  1. setting a base price for their service as accurately as possible in advance (taking into consideration cost of goods or relevant market conditions);
  2. setting rules to adjust prices based on real-time market conditions such as utilization, demand or weather. The goal is to generate maximum revenue by adjusting price to meet demand.

How Dynamic Pricing is Used?

Try to answer this question: How much is a flight to Texas?  A hotel room?  There isn’t a single answer, as the price changes based on day of the week and available inventory. Dynamic Pricing has been the standard for the travel industry for years, and is now being employed by more and more industries.

For example, many Major League Baseball (MLB) teams are now utilizing Dynamic Pricing, including the Chicago White Sox. According to their website (as of May 2013):

  • The White Sox will dynamically price tickets to all 81 home games in 2013.
  • Fans are encouraged to purchase tickets for high-demand games early, as prices are expected to increase as the season progresses.
  • As the season progresses, ticket prices will be adjusted, either upward or downward, based on market demand.
  • The ability for the White Sox to adjust prices during the season provides all fans with various pricing options.

What does this mean to White Sox fans (pre-season)?

  • Popular rivalry = White Sox vs. Cubs = higher prices
  • Best time to draw a crowd = Friday nights or weekend days = higher prices
  • Hardest time to draw a crowd = weekdays = lower prices

What does this mean to White Sox fans (mid-season)?

  • The White Sox have a losing record (14-25 in mid-May) = empty seats = low prices
  • If they started winning = tickets start selling = prices go up
  • Prices in upper deck and on weekdays remain reasonable
  • If they make the playoffs = prices skyrocket

How do you communicate prices to consumers?

That decision is up to you. In the case of the White Sox, consumers were told upfront about dynamic pricing for the 2013 season. Informing customers that dynamic pricing is in use (and turning it into a positive) is becoming standard for many teams throughout the MLB, NBA, and NCAA.

On the other hand, many industries use dynamic pricing in the background:

  • Hotels
  • Airlines
  • Rental cars
  • Broadway tickets

Am I Crazy or Did That Price Just Go Up?

Web retailers often DO raise prices when you visit a website several times before purchasing. They also offer different deals based on your browser (i.e. banks offer different rates on car loans to Firefox vs. Chrome users, while Orbitz presents cheaper rooms to PC users).

So When Are Consumers OK With Items Being “Dynamically Priced”?

We don’t seem to mind when the product is something that expires (like a hotel room, a flight, or arguably, a tee time) and the price increase is based on demand, not the size of a customer’s wallet (a full hotel, a full flight, or a full golf course = higher prices).

So if Hotels and Airlines Have Been Doing This for Decades…Is the Golf Industry Decades Behind?

Consumer acceptance and technology are important factors in determining when a business or industry should adopt Dynamic Pricing. The evolution to a new pricing strategy doesn’t happen overnight, but we’re already seeing many EZLinks clients implementing step one of Dynamic Pricing:  “Set prices as accurately as possible in advance (taking into consideration set, relevant market conditions).”

There are several examples of adjusting prices based on pre-determined rules. Rates differentiate for:

  • Early-bird/rack/twilight based on demand and number of holes a golfer can play.
  • Weekday/weekend based on demand.
  • Price breaks by days in advance: 31-60 days vs. 0-7 days to try and change consumer behavior.
  • Player type (Public, Resident, Cardholder, Member) to incent signups.
  • Sales channel (course website, EZLinks Reservation Center, wholesaler, walkup) to best compete in a channel.
  • Automatic discounts for prepaid tee times to reward pre-payment.

Adding Dynamic Pricing to Your Revenue Strategy

There are many factors to consider when determining the right pricing strategy. With multiple sales channels, it can be a full-time job. However, advances in technology in the golf industry are making Dynamic Pricing easier, reducing the time and effort to implement, and creating real-time contributions to the bottom line.

For example, the EZLinks Dynamic Pricing Engine is a sophisticated tool within the EZLinks WebMarket platform and offers course partners a better understanding of how this all works:

  • Automatically change rates as utilization changes.
  • If tee sheet is 50% utilized at seven days out, then improves to 75% utilized at four days out, rates will automatically increase.
  • Different prices and utilization triggers can be set up by sales channel, day of week, and even by day part.

These advances in technology are allowing courses to shift away from the tradition of rack rate pricing and ultimately benefit both the course and the golfer. How much does it cost to play a round of golf, on a perfect day, at your favorite course? Though there may no longer be a set rack rate, the answer to most golfers is priceless.