Tag Archives: pricing

Economics of Airline Class Seating

Plane fares are frustrating. From the time someone searches for a flight in the morning, until they book it later in the week (or day), the price changes. And don’t even get started about how little leg-room and seat space there is in the economy class section! But then again, the economy class is not how airlines make money. How does an airline make money on fares?

First class and premium cabin seats!

Here is an example of a flight’s pricing: British Airways 777, round-trip, non-stop between London and Wash. D.C.

  • 224 seats total
  • 122 economy seats @ $876/seat = $106,872
  • 40 premium economy seats @ $2,633/seat = $105,320
  • 48 business class seats @ $6,723/seat = $322,704
  • 14 first class seats @ $8,715/seat = $122,010

The front sections of the plane account for 45% of the seats, but generate 84% of the revenue! While this model does not always hold true, in general airlines get 66% of revenue from the premium, business, and first-class seats.

In essence, airlines are able to sell the same service (transportation) to different people, at vastly different prices (enhanced amenities and the onboard experience). Airlines realized that passengers could be segmented into two categories: tourists, and business people.

What else will future air travel hold?

Group Activities and Discussion Questions:

  1. Pricing is usually a complex topic. Discuss the six steps for pricing (determining objectives, estimating demand, determining cost/profit relationships, select price level, set list price, and make adjustments).
  2. Discuss the various pricing models in class: demand-oriented, cost-oriented, profit-oriented, and competition-oriented.
  1. Show this video that explains the basic economics of airfare:
  2. https://youtu.be/BzB5xtGGsTc
  3. Draw the price structure on the board.
  4. Divide students into teams. Have each team work on a possible re-design of planes to address more market segments.

Source: Wendover Productions, YouTube

Leave a comment

Filed under Classroom Activities

Toddler Bike Racing

It’s summertime and the weather is hot – perfect for riding bikes, and for competitive racing, too. Now, even toddlers can get in on the action at the Strider Cup balance bike races.

The Strider Cup is a series of four races, ending with a World Championship event. The festival also includes adventure zones for playing and test riding the balance bikes. It is focused on positive aspects of sports competitions for toddlers, and more importantly, teaches them how to easily learn to ride a bike.

In case you are not familiar with Strider and balance bikes, the company started when the founder wanted to share his love of adventure and riding with his 2-year old son. But, traditional tricycles and training wheel bikes didn’t offer the same adventure and off-road riding ability. What resulted was a kid’s bike without pedals or chains. Essentially, it is a light-weight, simple to ride bike where riders can keep their feet on the ground as they learn to balance and glide.

Strider is the leader in balance bikes, selling more than 1.6 million bikes in 70 different countries since 2007. There are several models of bikes, ranging from classic ($99.99) to pro ($169.99), and also offers special needs bikes for all abilities (up to $219.99).

Come on – let’s go for a ride!

Group Activities and Discussion Questions:

  1. Pricing is a complex topic. Discuss the six steps for pricing (determining objectives, estimating demand, determining cost/profit relationships, select price level, set list price, and make adjustments).
  2. Discuss the various pricing models in class: demand-oriented, cost-oriented, profit-oriented, and competition-oriented.
  3. Show Strider balance bikes Web site: https://www.striderbikes.com/
  4. Videos of the Strider Cup and the cute toddler racers: https://youtu.be/nwyDKv_v0P0
  5. For balance bikes, divide students into groups and have each group work on any/all of the six steps.
  6. When setting the price level, assign each team a different model to use (demand-oriented, cost- oriented, etc.).
  7. Debrief the exercise. Compare the various pricing models and discuss advantages/disadvantages of each.

Source:  Outside magazine   

 

Leave a comment

Filed under Classroom Activities

Prosthetics for Pets

There is no doubt that the medical options for prosthetics offered to people are advancing by giant leaps. Recently, we wrote about a new amphibious prosthetic leg developed specifically for swimmers. Such innovations are not reserved only for the two-legged species; new orthotic and prosthetics are also available for pets who need new paws or legs.

While the animal prosthetic industry is very new, there have been new advances and an increase in demand for prosthetics for animals. According to industry experts, the growth has been exponential for the innovative services.

Perhaps some of this is due to the change in family/pet dynamics – pets are often viewed as important members of the family, and receive important health care. The prosthetics are custom-made and can cover knees, ankles, pays, wrists, elbows, and legs. Orthotic devices range in price from $750 – $950, while prosthetics average $1,350 – $1,750.

What would you pay for your pet’s care?

Group Activities and Discussion Questions:

  1. Pricing is usually a complex topic. Discuss the six steps for pricing (determining objectives, estimating demand, determining cost/profit relationships, select price level, set list price, and make adjustments).
  2. Next, show the Web site and videos for Ortho Pets: http://orthopets.com/
  3. Discuss the various pricing models in class: demand-oriented, cost-oriented, profit-oriented, and competition-oriented.
  4. For this product, divide students into groups and have each group work on any/all of the six steps.
  5. When setting the price level, assign each team a different model to use (demand-oriented, cost- oriented, etc.).
  6. Debrief the exercise. Compare the various pricing models and discuss advantages/disadvantages of each.

Source: Tribune News Service

 

Leave a comment

Filed under Classroom Activities