Magical Pricing From Disney

disneyland-cast-of-chracters-2There are two kinds of companies – Price Setters who actively take control of their pricing and Price Takers who let their competitors and market tell them. I wrote about the two in the past.

Disney, like Apple and Starbucks is clearly a price setter. You may be distracted by the silliness of characters but think about the number of price points they have to set in a operating  parks. It is no job for Mickey Mouse.

stroller-rentals_Even setting the price of stroller rentals is carefully studied and set to capture value. Single roller costs $15 a day at DisneyWorld, and the double stroller costs $31. Clearly because those who rent the latter see higher value from its convenience and there is bigger demand for that.  And when you look at Disneyland in Anaheim the pricing is $15 and $25, more aligned to customers there.

That brings us to the news of the day that they are increasing prices of annual passes. Predictably there is outburst in social media. But take a closer look at how they did it.

  1. Technically it is not a price increase because they discontinued the previous product called Annual Premium Pass and introduced a new product called Signature Plus.
  2. It has added benefits that did not exist before like free pictures from rides and free parking.
  3. They introduced not just one but two products, second at lower price that is valid for 350 days but the business Christmas weeks. A comparable product did not exist before. This clearly gives the option for some to pay lower price if spending their Christmas weeks at Disneyland is not something they value.

There is more news that they are looking at dynamic pricing  for single day passes. Which again makes sense given the limited and expiring capacity. Wouldn’t you prefer a better product experience on holiday weeks because fewer visitors chose to come in? Wouldn’t you pay more for that value? That is the logic.

What do I think of Disney pricing news? I think this is yet another demonstration of effective pricing.

What can Mickey Mouse teach us about pricing?

That is is strategic, starts with customers and requires lots of data, analysis, experimentation and courage.