Product and pricing aspects in a hospitality industry

Most business institutions exist with the primary goal of profit maximization. However, the profits cannot be maximized without the provision of services or products. Therefore production features as an essential metric that most organization depends on in meeting the key objectives. These goods and services produced are therefore promoted, distributed to various destinations, and priced based on their usage, demand and value. Product and pricing work hand in hand in that a price cannot be fixed on a service or product that doesn’t exist and vice versa.

A few days ago we did a research about product and pricing aspects in a hospitality industry and . Specifically, about services and products that will be provided in the hotel and resort. Among the key services includes but not limited to the provision of recreational services, provision of conference halls, accommodation, and more. For the hotel section, clients will be served by different delicacies. For instance, the hotel will be offering authentic Australian style food, with the top on the menu being an all favourite steak, Dim sum, Sausage rolls, and pie among others. Therefore, these products and services that will be offered at the hotel and resort are instrumental for the exploration of product and pricing concepts.

The hotel and resort

The hotel and resort will be operated under two sections, the hotel and resort section. The hotel will provide Australian style delicacies like fried chicken, roasted meat, pizza,  boiled eggs, stew, drinks and the resort will offer accommodation, conferencing, lodging services and more others.  These will be the core revenue generating activities for the business. However, the meals mentioned are just a few, but the business will be in the position to offer varieties based on the response from the target market. The products and services, in general, are expected to earn the business a net profit of $75,000 per month from the third month. The projection is just for a start but based on the current studies conducted about the venture; the returns will increase monthly for the first three years.

The analysis of the competition

For certain, the business will be operated in a city where other similar businesses exist.  It thus implies that competition for the available market is inevitable. The recent research revealed that most of our competitors customize on marketing and sales promotion strategies to attract, retain and inform about their services and products. The stiff competition on the market will thus call for a significant investment in sales and promotion activities. Further, it will also require us to charge a relatively lower price on the standard and quality products and services.

Pricing strategy

The new entry into the market will need the application of a pricing strategy that can attract the attention of the customers. The price should be relatively fair. At the first two months, we anticipate the business not to make profits because of the relatively low prices charged and intensive sales and marketing activities. To meet the objective of business expansion, the penetration pricing approach will be used. It is where our meals and services will be provided to customers below the standard price or prices charged by our competitors.

Once the business has picked up well, the variable pricing will be applied alongside the standard pricing. The dynamic pricing will be used as a strategy to retain those clients who cannot raise the further increased price in the third months. However, the chance of the business receiving a significant customer base is very high since the target population exhibits price sensitive qualities. For instance, the conference hall will be hired for $100 a day, a 50 percent cut from the usual $200 charged. On the meals, a pizza will go for $40; a fried chicken will go for $50; a roasted meat will go for $40 and more. The friendly prices will act as a competitive edge for the penetration of the business.

Credit purchases

The business will not be exceptional from other. It thus implies that the business will establish a healthy relationship with the supplies and strike deals for credit purchases. The credit purchases will be embraced to allow the facilitation of other operational activities. For sure, allowing the business to make payment for the inventory supplied at the end of every month is critical for the financial plan. It is because the business may have time to plan before making payment than making daily expenses on inventory.

Credit sales

Besides the cash sales, the business will also use credit sales to few selected customers. The qualification for the credit sales will require a thorough screening of the creditworthiness of an individual. Also, the credit sales will only be given on specific days, maybe at the end of the week or during the weekends. The credit period will be shortened to one week upon which the amount due will start generating some interests. The credit sales will only be offered upon the submission of security. The security is perceived to discourage those who may wish to access the services on credit. However, any changes in the credit policies will be timely communicated to the customers. The business will only extend the credit if new terms are redrafted to commit the client further.


To sum up, the success or failure of business also depends on the quality and pricing strategies. If the inappropriate price is applied on a product, then customers may shun away from using the product or service. In addition, if the product is of poor quality, the customers may fail to prefer it giving the providers of quality services a chance to dominate the market. On the credit sales and purchases, they are not bad, but the existence of appropriate policies gives a guide to the involved parties to minimize the risks of the breach.