Price vs. Turnover
A few months ago, when the tourist season was still open in the area where I live, I was talking to a friend who owns a guest house in the area, and we were analyzing how he was doing business with his guest house at the time. It is absolutely irrelevant to go into too much detail and costs, but the takeaway from that discussion is the change in tactics that he plans on having for 2021.
In the approximately seven years since he owns that guesthouse, he has somehow gone more towards turnover, rather than spicier prices relating to exclusivity. Being permanently below the market price, the guarantee of bookings throughout the tourist season was secure. I was with him countless times when clients called him and he only answered to tell them that he had all the rooms reserved until the end of the season.
In a way, his strategy removed the potential stress he would have had in filling the house throughout the year with the stress of the accommodation itself. As he said, a higher turnover, automatically involves higher maintenance costs, such as electricity consumption, water, household and so on. Offering quality services at low prices guarantees your market demand. However, it seems that this was not the best decision.
So, starting with this year, he decided to increase the booking prices by about 20%, which will fluctuate, of course, depending on the time of year, and to rely more on more generous tourists than on the most economical but numerous ones. I agree with him in this direction because with prices 20% higher this year, although probably benefiting from reservations 20% lower than last year, his earnings are almost the same, probably even better.
Having no customers permanently, throughout the tourist season, results in lower maintenance costs and even less stress, given that managing a tourist guest house is not an easy task.
This situation reminds me of a former Steem user who, more than two years ago, noticed that on days when he was posting only once a day he managed to collect the same amount of STEEM as when he was posting twice a day on a regular basis. Somehow those who upvoted his content and consumed it valued scarcity more than turnover. I want to mention also another situation quite relevant to the subject that I noticed at my investing strategy more than a year ago.
At one point, I remember investing in crypto an amount of money equal to 0.4 BTC. I really remember this round amount of satoshis and I know for sure that I was using Jaxx as a wallet at that time. 0.4 BTC seemed small though, like I wasn't even owning one unit of BTC, it wasn't a big number with many zeros you know, and according to my predictions back theb the potential ROI in a possible bull market would have been too small, so I decided to exchange that BTC for ETH and I got 10 ETH for that same amount, but have I held these 10 ETH? No...
I chose the turnover and kept jumping from one shitcoin to another until I almost decimated those 0.4 BTC. If I still kept those 0.4 BTCs I originally bought, no more than two years ago, they would have been worth about $ 16,000 a few days ago, and even if I still exchanged BTC for ETH, BUT HELD, the amount invested then would be worth much more now than the few shitcoins I have as a result of the turnovers, and the strategy of buying hot and cheap altcoins, that you can own them by the tons, that will "certainly moon" and make you a lot of money.
This strategy seems to be very obvious in the automotive industry where some brands simply prefer to sell fewer models at a higher price than more copies at a lower price, the quality differences being insignificant at present between many brands. Some choose the price, and others choose the turnover. Not always a higher price guarantees a better quality, as in the case of crypto, the car industry, or even in the case of my friend's boarding house, but it pays scarcity.
However, often times the price denotes exclusivity, and some of us value exclusivity. Also today I was wondering how is Bitcoin better than Litecoin for example...? I don't know exactly to be honest, but what I do know is that BTC is 260x the price of LTC. Is Bitcoin really 260 times better than Litecoin? I doubt that... However, Grayscale, Microstrategy and other tens of whales in the crypto space are paying its premium price because BTC set its value as a store of value right from the beginning, while LTC came out as the BTC lite and will have to wear that stigma...
I could go on with such analogies indefinitely, related to the price vs. turnover strategy, but it is irrelevant. From what I've noticed, putting a higher price on certain services or products actually reduces a certain stress factor, totally unnecessary one, and often times reduces costs as well. The cost of loosing value, time, et etc
Thanks for attention, Adrian
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