Optimising admission prices is fundamental to the successful operating performance of visitor attractions. Setting the price too high can depress attendance; setting it too low can reduce profit. Hence attractions place great importance on price strategy, taking many factors into account in setting annual price changes, including:

• Mission – is your objective to optimise volume or value? Some non-profits are required to do the former, most commercial attractions do the latter.

• Changes to the visitor offer – is anything being added which supports an above inflation price increase?

• Your visitors’ views – how price sensitive is your current and potential customer base?

• Your discounting strategy – the lead price needs to have sufficient headway to allow discounts to be applied for web sales, concession tickets and promotions, as well as account for annual pass holders.

• VIP access – will some of your audience pay premium prices for added value options?

• Competitor pricing, including perceived price per hour – based on current prices and any information on competitors’ future plans

• The economy – projections for inflation and currency exchange rates (for attractions with international markets)

So crucial is setting the right price that attractions are increasingly turning to consumer research to test the price sensitivity of their key audiences, finding the optimum point between being so cheap it raises concerns over quality and so expensive they’re not perceived value for money.

Once prices are set, it’s crucial to monitor visitor response. Downward trends in customer satisfaction ratings for value for money and enjoyment can provide an early indicator of dissatisfaction, allowing you to adjust prices before they substantially impact attendance.

There’s been much debate about Disney and Universal breaking the $100 barrier. For any attraction, deciding when to cross one of those landmark price points is tough.

Undoubtedly it’s easier to do this in a year when you’re providing a substantial addition to the experience, enabling you to cross the barrier confident that you’ll continue to provide excellent value for money.

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When Disney established its $99 price point in 2014, it could no longer continue to walk in micro-steps towards a perceived $100 “wall” – instead, it had to move the wall. Someone had to do it at some point and, as the market leader, Disney was the logical first mover.

Disney’s bold 2015 pricing decision is supported by historic double-digit growth of underlying financial performance, indicating there’s been no significant resistance to their price points and strategies so far.

A company shouldn’t necessarily be bound by something as artificial as a triple-digit price barrier. It’s not that there isn’t a psychological barrier, but that recent pricing policy at Disney World hasn’t actually had a negative impact on overall park and resort performance.

In taking its pricing decisions, Disney would have looked at its own wealth of internal data as well as broader tourism data and trends and economic indicators, including household expenditure surveys, consumer confidence and much more

In fact, when one compares historical growth of Disney’s lead price against any number of proxy measures and comparables in the US – including leisure services expenditures and pricing for cinema tickets and sports events – Disney’s price growth, is pretty consistent with the upper end of the leisure industry.

Increases in the consumer price index (CPI) tend to be similar over time to inflation – a 2 to 3 per cent average annual growth rate – and overall growth in expenditures for leisure services is just over 3 per cent.

Over 10 and 20-year periods, growth in average cinema ticket pricing is a little higher again, and sports tickets are in the 5 to 8 percent growth rate range. Disney’s lead price growth – at an average annual of 5 to 6 per cent over the same periods, puts Disney towards the upper end of the range, but certainly not as an outlier.

Also important to the Disney pricing policy is the “destination” factor – i.e., hardly anybody pays the walk-up price. Instead, the lion’s share of Disney World’s customers, including international visitors, purchase tickets online, in advance, and typically as part of a multi-day pass and/or package, which offer savings.

A more cynical hypothesis, I suppose, might say that the more you communicate a lofty lead price while simultaneously offering significantly discounted package pricing, the greater the perception of savings by customers. This year’s headline price increased 6 per cent, but multi-day tickets went up between 3 and 4 per cent.

For regional parks, who rely on fixed markets and repeat visitors and face resistance to price rises, there’s an awareness about what Disney’s charging and, as a result, a $62 or $67 lead price at Six Flags or Cedar Fair – which, again due to season passes and promotions, no one really pays – suddenly seems a relatively good deal.

In that way, I suppose it’s fair to say that Disney is pulling the whole train along in terms of the industry’s lead price point.

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Pricing is a touchy, tricky and critical issue. Everyone has a view about price levels that are or are not acceptable, and – given the chance – we’re all forthright in broadcasting these views.

But what price levels really are acceptable? As business operators, it’s as wrong to under-price our services as it is to overprice. We need to hit the sweet spot where our visitors agree they’re getting great value for money while we’re maximising our revenue opportunity.

Finding that sweet spot needs objective evidence. This evidence can come from three routes: looking at what’s around you in the immediate vicinity; understanding what is in the consideration set for those who choose (or choose not) to visit you; and through indirect questioning.

What else is available to leisure visitors to the area? How do they compare with you in terms of what they offer (dwell time, age appeal, interactivity etc)? Is there a “going rate” for your area?

Where else did visitors think of visiting before they came here today? Where else will they go on this trip? What do they compare you with? Can you get a fix on pricing in the consideration set?

Most importantly, what is the value of your equity? Are you seen as a value-added or commodity player? This massively affects where you should pitch your price. We can’t directly ask the target audience what they’re prepared to pay for entry – this almost always generates undervalued estimates as people try to haggle the price down. But by using indirect questioning and modelling, we can generate highly accurate insights into price thresholds and the effects of raising – or lowering – your price.

Disney and Universal will have carefully modelled pricing scenarios before making these decisions. They’ll know how many fewer visitors they’ll get, and that their businesses will improve at these prices.

The visitor experience may improve with slightly fewer numbers, higher spenders will still come and maybe spend more. Is $100 too far for these attractions, in this location? Not for these attractions, in these locations. But that doesn’t mean it’s OK for you.

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The price to enter a Walt Disney World theme park has increased almost every year since 1971, when entry cost only $3.50. Now the single-day adult price has surpassed $100, does it still represent good value for the customer?

First, let’s ask if price increases have been fair. The entry price has increased by approximately 130 per cent since 2000, which is an average annual increase of 5.6 per cent. If prices had been linked to inflation, today’s ticket would be $63. In real terms, it’s one and a half times more expensive to visit the Magic Kingdom in 2015 than it was in 2000.

In the past nine years prices have increased by 66 per cent, not dissimilar to the 60 per cent increase at the UK’s leading park, Alton Towers.

However, when you compare them to some other destination leisure products they appear disproportionate. For example, the average cost of an NFL ticket has “only” risen 35 per cent since 2006 (to $82.50).

Comparing headline prices can be misleading, as joint ticketing and discounting have evolved considerably over the period. In Florida particularly, many guests buy packages of tickets with implicit discounts, assuming they have the energy to maximise value for money.

In addition, there’s the impact of new product. Disney points out its recent price rises are supported by new experiences on offer at its parks such as the Festival of Fantasy Parade.

So, how does it compare today? Disney leads the world theme park market in terms of pricing, based on the brand and the quality and depth of investment it makes both in park infrastructure and also in live on-site entertainment. Universal Studios has raised the price of a one-day ticket to $102, only $3 less than Disney and hardly likely to be a differentiator to consumers.

Theme park pricing, as shown in the table [Figure 2], is quite consistent with other parks in Florida at a 10 to 20 per cent discount to the “big two” and major regional parks at about 30 per cent discount.

At face value that doesn’t seem like an unsustainable price differential against the other theme parks. Indeed there are many experiences that are more expensive – Discovery Cove, for example.

In conclusion, the real test is if customers keep coming and I believe they will. Disney prices have been rising ahead of inflation for many years, and yet Walt Disney reported domestic park attendance rose 7 per cent in the three months ending 27 December 2014 – a company record.

Walt Disney World Resorts also reported a 7 per cent increase in revenue year-on-year. This seems to indicate that despite the increasing cost, customers still value the experience and are willing to pay the premium.