P
arking has come a long way from the beginning of my career when collecting cash in a cigar box was the norm. Since then, technology has fueled industry-wide transformation across payments, access solutions, wayfinding, and more. But, when it comes to pricing, we have been stagnant.
Demand data drives our ability to increase rates when demand is high and decrease rates when demand is low.
Rates have long looked the same with a few static rate bands and some specials; how we set rates has also remained the same. Rate surveys, daily traffic, big events, and other external factors are all considered when thinking about rates. Or, maybe we just watch our neighbors and change posted rates accordingly. At the end of the day, setting rates is largely guesswork and operationally taxing. Isn’t there a better way?
Fortunately, technology can help us transform this part of the industry, too. The solution lies in making more informed, data-driven pricing decisions using demand data.
What is demand data?
Demand is drivers searching for parking. When cars drive past a facility, it’s impossible to tell who is searching for parking from who is just driving by, making offline ‘demand’ challenging to measure. We can approximate offline demand using occupancy, but that is only one piece of the full demand picture.
How can we use demand data?
Demand data drives our ability to increase rates when demand is high and decrease rates when demand is low. Simple enough, right? Because demand is constantly changing, it’s important to act fast. While it’s possible to manually adjust rates according to demand trends, the operational burden of doing so quickly is immense. To maximize value from demand data, it must be automated. Enter: dynamic pricing.
Dynamic Pricing Makes an Impact
As rates increase (like during peak commute times and events) and decrease (like during nights and weekends) in line with demand, we can balance rates and volume to capture maximum revenue. This fluctuation also positions parking as the ultimate flexible choice, providing drivers with thousands of rate options that allow them to pay for the exact parking they need. This shift brings more customers more often, increasing average ticket values and turning over spots at a higher frequency for increased yield-per-stall.
The path forward into an uncertain future
This year has thrown some sharp turns our way, highlighting the importance of adapting to our ever-changing world. Leaning into demand data to inform dynamic parking rates will help us confidently face the future and navigate the uncertain.
Nate Phillips, VP of Enterprise Sales and Client Development at Spot Hero He can be reached at nate.phillips@spothero.com
