Theme parks along with many other businesses that have a high fixed cost hurdle are forced to focus on demand. Unpredictable demand causes problems in businesses especially if your business has high fixed costs. If your business has more demand than expected it is likely that your customers will have a poor experience. On the other hand, if your business is staffed for high demand but your customers never show up you will be paying your staff to stand around all day. While there are fixed and variable costs of operating a theme park the fixed costs require a certain level of demand for your business to break even. For a theme park to make money it needs to charge Guests more than the total cost of the keeping the gates open during all operating hours. The goal for this business is to put as many Guests through the gate on any given day at the highest price possible. The principles of revenue management come into play for this type of business. If demand exceeds capacity then pricing increases must be used to lower demand. If demand is lacking then discounts may be utilized to drive the volume needed to operate at economies of scale. Are there ways to guarantee the demand needed to cover fixed costs? Sure, annual passes, timeshares, and on-site events are some of the ways that this business ensures demand stays consistent throughout the year. These demand securing tactics work today, but I believe there is a better way to secure future demand. Contact DJR Jeeves Consulting today to discuss how your business can secure future demand.
Published by Douglas J. Rimler
I grew up in a small town in New Jersey where your Dunkin' Donuts coffee was ready for you when you walk in the store. I moved out of New Jersey to attend West Virginia University where I studied accounting and learned valuable life lessons. Disney hired me right after I graduated from West Virginia University and I worked in a variety of capacities including marketing, operations, and data analytics. I was fortunate to attend The University of Florida for a MBA while I worked for Disney in Orlando. A promotion led me to Los Angeles where I moved on from Disney and ventured into the Insurance Industry with Farmers Insurance. Now, I'm following my childhood dream of becoming an entrepreneur. A majority of my life has revolved around business and making smart financial decisions. Let DJR Jeeves Consulting help your business achieve prosperous growth. View all posts by Douglas J. Rimler