Management Accounting: Pricing Strategy for Chatsworth House Trust

This report provides a comprehensive analysis of pricing strategies for Chatsworth House, a historic attraction operated by the Chatsworth House Trust. The report begins with an introduction to the property and its unique selling points, followed by an evaluation of the current pricing approach and its challenges within the competitive hospitality industry. It explores various pricing strategies, including cost-plus, competitive, value-based, price skimming, and penetration pricing, assessing their suitability for Chatsworth House. The report emphasizes the importance of understanding the target market, which consists of an upper-income audience interested in art, culture, and royal experiences. The report recommends a combination of competitor and value-added pricing strategies, highlighting the benefits of this approach. The report includes suggested methods for calculating the pricing for a product and concludes with recommendations for improving the pricing structure, considering factors such as competitor analysis, target market understanding, and the potential for data analytics to optimize sales and revenue. It also highlights the potential for destination weddings to increase revenue.

Pricing Strategy P a g e | 1
Name:
Class:
Subject:

Pricing Strategy P a g e | 2
Contents
Introduction...........................................................................................................................................3
Evaluation..............................................................................................................................................3
Pricing Approach...................................................................................................................................5
Benefits of Pricing Structure..................................................................................................................6
Recommendation:.................................................................................................................................9
References...........................................................................................................................................10

Pricing Strategy P a g e | 3
Introduction
This report refers to the Chief Finance Officer of Chatsworth Trust to implement a new
pricing strategy to boost the business of the trust.
Chatsworth House is home for the Duke of Devonshire, a royal house situated in Derbyshire.
This property is run by Chatsworth Trust own by Devonshire group with other property. The
USP of the property is that still royal lives in his house which has a huge collection of historic
artefacts. (www.chatsworth.org)
In this report, various pricing strategy will be discussed, and the best suited will be
recommended to the board for consideration.
Evaluation
Price is the amount of money paid for given product or services. It sometimes also defines
the value of the product. Chatsworth House deals with the hospitality industry. Europe is
famous for its castles turned resorts and hotel which provide world-class service at a
competitive price and Chatsworth is one of them.
Hospitality Industry is a very fast growing the dynamic market with coming of new brands
hotels with competitive price Chatsworth has to face the loss of significant share of market
and business.
In today's world consumer has become very proactive while spending. They do a lot of detail
study before buying anything. They too want to experience luxury but at accommodating
price. Devonshire has many luxury hotels like Radisson Blue, The Palace Hotel, and Hilton
Hotel etc. these hotels provide luxury at affordable prices to their target segment (Nair,
2018).
Europe is one of the most renowned tourist destinations. People from all over the world
travelled to witness the scenic beauty. Europe is not only famous for its beautiful location but
also its beautiful forts, palaces and churches. Many Castles and forts have been restructured
and renovated and turned into hotels which cater common man. Many renowned Brands like
Starwood, Hilton, and Britannia etc. have undertaken such property and provide best
services and product to its customer. They run huge loyalty program which they have
through the large database (Bar-Gill and Stone, 2012).
People worldwide have an interest in historic monuments and places. Europe is one such
place. Many places and artefacts are from renaissance period. People visit to see the

Pricing Strategy P a g e | 4
historic work of Da Vinci, Leonardo and many another famous artist of that time. This is the
selling point in Europe. Great Britain is the house of Royals, and various duke and duchess
have their palaces and forts. These forts and palaces are huge and attract large tourist from
the world. Many of such places has been restored and reconstructed and converted into
luxury hotels to generate revenues. Either they been run by their trust or have gone
undertaking of any brands like Starwood or Hilton (Zhang et al., 2018).
These brands have less difficulty in positioning themselves as they have experience and
manpower to run the business. They have experience of managing multiple properties
worldwide. They have various properties which target different market at the same time.
Their values and service differ from each other. For example, Starwood Sheraton provides
budget service to its customer whereas St. Regis provides butler services, it’s a super luxury
hotel. Their pricing and positioning strategies differ from each other. It’s a value-added
service that differs from each other so the target audience(Su and Liu, 2017).
Devonshire Group is a local group which has property primarily based in Britain. To establish
themselves they have to look out for their target market and according to them have to come
up with its price. Their price should fit with customer perspective and idea. Lowering the
price will not solve its problem as they have to determine other factors like services and
product which satisfy the customers at large. Price is the important component of the
marketing mix. It also determines the people, position and place. They only give its
consumer the insight of historical artefacts but also give a glimpse of royal heritage and their
lifestyle. They should target such a market where the consumer has no pain in shedding its
money for luxury and experience. With fairytales like gardens and sculptures, they stand out
in front of its competitors. The main palace rooms are closed for the visitor, but they buy
tickets to visit the palace and its garden. They can stay in outhouse and hotel made on the
premises of the palace. They have their gift shop which attracts people from all over the
world (Kilburn, 2012).
Pricing if done properly keeping all the factors in mind, then it could cost to the organisation
at large because people post their reviews which becomes one factor which determines the
visit of another tourist. With the world becoming so small because of technology and the
internet it is now straightforward to get the information regarding anything whether good or
bad and based on that to make our choice to buy anything. Price is one of the very important
determinants of the marketing strategy. It's placing, and position of the target market is
determining its audiences (Ozhegov and Sidorovykh, 2015).

Pricing Strategy P a g e | 5
By looking and doing the detailed study of competitors, it is inferred that a mix of different
strategies is used for pricing the product and to make its position in the market.
Pricing Approach
Pricing approach is done keeping the product in mind, its quality and service. In the
Hospitality Industry, it is simply based on its service and product they offer to the price to be
paid. Two or three strategies could be mixed to standardize the pricing (Mark, 2012).
There are mainly five different types of pricing strategy namely
a) Cost-plus Pricing
b) Competitive pricing
c) Value-based pricing
d) Price Skimming
e) Penetration Pricing
Cost-plus pricing – the cost of the product is evaluated, and markup is added to sell it. So
other value is added to the service. It’s a very niche pricing strategy. It’s for the product
which has large target market share and produces in quantities. The value ad on cost is not
applicable here.
Competitive Pricing – in this kind of strategy the detailed study of competitors is done as per
that the pricing of product done. Vast variations in prices are avoided as this consumer
compares rates before buying anything. If the cost of the product is high as compare to its
competitor and offers same services, then it will attract negative response from people, and
they will not avail its services(Kachani and Shmatov, 2010).
Value-based pricing – Company based its price assuming consumer will pay as per its
value(Trierweiler, 2011).
Price Skimming – the Initially Company, sets the high price, and as demand rise, it reduces it
to target more audiences. Initially, the product is priced high so that fewer sales can achieve
break-even point in less time.
Penetration Pricing – it is done when product newly launches. So to enter the special market
prices are kept, and later on, it gets increased as per the demand. It is done so to have its
share of market gain and consumer
Management will think and evaluate various prospect and two or more strategies will be
applied to revive the business and to increase its revenue. Pricing strategy is a kind of

Pricing Strategy P a g e | 6
marketing strategy which gives away to any organisation to make its position in the market.
In the hospitality industry it's easy to understand the nerves of the market and its completion,
and according to it the pricing of the product is done. The prices of the service and product
can't vary with its competitors as a consumer is very active and do its research before any
booking.
Hotels are also categorized into different segments like budget hotels, lodges, luxury hotels,
boutique hotels and so there target market, or audiences are different.
Chatsworth House is a luxury experience for visitors because of its lush garden and statues.
It gives an insight into the royal living and their lifestyle. Like Amusement park they have
their target audience who has an interest in the historic monument and part of that era. They
have to understand their audience that what they want if they are paying a good amount of
money to avail their services and product (Kuncoro and Sutomo, 2018).
Chatsworth House gives a tour around to its guest for a fair amount. People from all over the
world come and have a look at the art and statues of this place. There are many gardens of
thirteen and fourteen century with beautiful waterfalls and fountains and situated. They host
many parties and catering to a royal family of Devonshire and their counter families. They
have huge real estate property which could cater to the need for many people.
They should mix two strategies like competitor pricing and value-added pricing strategy to
redesign their pricing structure. As many royal places have come been acquired or
transformed into hotels and resort, Devonshire not only provides services but also connect
the people with the art and tradition of the golden era at that time. This is their USP. They
should focus on that. They should segment their target audience who has a love for and are
ready to pay for it (Dou and He, 2016).
Destination weddings these days are one of the factors which can increase their revenue.
They should sell their property in the market as the best location for a destination wedding
which can cater to the large and sophisticated group. They have their in-house cottages and
hotels which can accommodate people who are travelling to Devonshire and exploring the
royal heritage of Britain. Chatsworth is famous for its elaborate and exclusive artwork which
is a rich heritage to the royal of Britain. Their pricing strategy will be appealing to the
particular target market or the people who are ready to pay for royal experience (Yu et al.,
2011).

Pricing Strategy P a g e | 7
Benefits of Pricing Structure
With a target market share, it’s become easy to project our pricing share. Our target market
is an upper-income audience who travels the world have known about art and culture and
readily pay for the royal experience. Here we are well aware of the crowd we are catering to
who has no issue in paying little extra for value-added services like parking etc. (Johansson
et al., 2011).
Trust has to understand the need and demand of such clientele and according to that have
to plan for its course of action. They have to sell their USP and position itself unique in the
market.
Using Data analytics, they can predict the sales so they can mark up the prices keeping the
competitors in mind. They not only sell their property as a tour around but as a whole
package which serves and meet all demand of the consumer (Feng, Li and Zhang, 2014).
Suggested methods for calculating the pricing for a product: -
Fig 1: - Profit With Value-Based Pricing
Source: -https://www.priceintelligently.com/blog/value-based-pricing

Pricing Strategy P a g e | 8
Fig: - Profit with Competitor-Based Pricing
Source: -https://www.priceintelligently.com/blog/value-based-pricing
Fig 3: - Profit With Cost-Plus Pricing
Source: - https://www.priceintelligently.com/blog/value-based-pricing

Pricing Strategy P a g e | 9
Each of the presented pricing strategies is affecting the pricing strategies of the business
world. A small gas-station should take up the cost-pricing method. Ultra-Competitive retail
business will prefer using the pricing in line with competitors is very important in making it
profitable using the Profit with Competitor-based Pricing strategy. But, in the present case in
hand the only viable option is Value-based as the organization in question is SaaS, where
the company is earning through offering value to the customers (Paunović, & Jovanović,
2017).
Recommendation:
Before introducing any price strategy Trust has to learn the few key points about its
competitors in the vicinity and services provided by them.
Target Market will help to make them understand better about the pricing of the product.
They should not target the whole market to high revenues generation because it will all be
jumbled up. The as different market has different needs, and they cannot cater to everyone
needs (Snelgrove, 2017).
Chatsworth House should be following the value-added and competitors pricing strategy to
boost their revenues and have set target market. It will be easy for them to meet the demand
of the consumer. This pricing will be the best fit for the consumer perspective. This will allow
them to more profitable and help them to grow their business and resources. To match the
market need they have to adapt better production value.
Pricing Strategy is best method o built image and targets its market share. The pricing
strategy is not price or number, but basically, it's a relationship between the demand and
supply chain. They need to be updated from time to time about the hottest trend in the
market, and according to that, they can redesign the pricing structure. They have to try a
different combination of strategies to mark their foot f=print in the business. They have to
establish their self as a premium brand in the area so that they cut down on their competition
when it comes to royal treatment and experience (Hinterhuber, 2017).
They should follow the best practice in the industry to meet the demand of their consumer
which eventually helps them to grow their business.

Pricing Strategy P a g e | 10
References
Bar-Gill, O. and Stone, R. (2012). Pricing Misperceptions: Explaining Pricing Structure in the
Cell Phone Service Market. Journal of Empirical Legal Studies, 9(3), pp.430-456.
Dou, G. and He, P. (2016). Value-added service is investing and pricing strategies for a two-
sided platform under-investing resource constraint. Journal of Systems Science and
Systems Engineering, 26(5), pp.609-627.
Hinterhuber, A. (2017). Implementing pricing strategies. Journal of Revenue and Pricing
Management, 17(1), pp.1-2.
Johansson, M., Hallberg, N., Hinterhuber, A., Zbaracki, M. and Liozu, S. (2011). Pricing
strategies and pricing capabilities. Journal of Revenue and Pricing Management, 11(1),
pp.4-11.
Kachani, S. and Shmatov, K. (2010). Competitive Pricing in a Multi-Product Multi-Attribute
Environment. Production and Operations Management, 20(5), pp.668-680.
Kilburn, K. (2012). The Chatsworth Uranographia Britannica. Astronomy & Geophysics,
53(1), pp.1.22-1.22.
Kuncoro, A. and Sutomo, Y. (2018). Pricing Strategies and Implementation Promotion
Strategies to Improve Customer Loyalty. Jurnal Dinamika Manajemen, 9(1), pp.89-99.
Mark, J. (2012). Pricing Strategies. SSRN Electronic Journal. 11(1). pp. 1-13.
Nair, G. (2018). Dynamics of pricing and non-pricing strategies, revenue management
performance and competitive advantage in the hotel industry. International Journal of
Hospitality Management. Assessed through
https://www.sciencedirect.com/journal/international-journal-of-hospitality-management/
articles-in-press.
Ozhegov, E. and Sidorovykh, A. (2015). Sellers' Heterogeneity in Housing Market:
Difference in Pricing Strategies. Journal of Housing Economics. 37(1), pp.42-51.
Paunović, I., & Jovanović, V. (2017). Implementation of sustainable tourism in the German
Alps: A case study. Sustainability, 9(2), pp.226.
Snelgrove, T. (2017). Quantified value first, then price: realizing the positive impact of a
value pricing strategy. Journal of Revenue and Pricing Management, 17(1), pp.41-44.

Pricing Strategy P a g e | 11
Su, Q. and Liu, W. (2017). Market segmentation and pricing strategies based on product
platform. Asia Pacific Journal of Marketing and Logistics, 29(1), pp.183-199.
Trierweiler, J. (2011). Pricing Linkages Between Added Value Levels Of The Beef Industry:
A Systems Approach. International Business & Economics Research Journal (IBER), 1(3).
Yu, M., Pubu, Z., Zhou, Q. and Xu, J. (2011). Study on Pricing Model of Online Auction
under Competitive Strategy. Journal of Software, 6(2).
Zhang, D., Sogn-Grundvåg, G., Asche, F. and Young, J. (2018). Eco-Labeling and Retailer
Pricing Strategies: The U.K. Haddock Market. Sustainability, 10(5), p.1522.