Apu’s World

Over at Escape from Cubicle Nation, one of my favourite business blogs, Pam Slim has been doing a series of ‘The Price is Right’ interviews (audio) with various entrepreneurs, and covering some interesting topics such as moving from free to paid and identifying the right price for your market. It’s given me a lot of food for thought, and I notice that I’ve been paying more attention to pricing than I did before. As I’ve mentioned earlier, pricing is one of the hardest things I face as an entrepreneur, and sometimes, that means I decide on an arbitrary price and avoid thinking too much about it

Anyways, the increased attention to pricing also means that I’ve been noticing it in ordinary transactions/ interactions that I go through, as a consumer. Recently, I’ve been thinking about visiting my sisters, both of whom live in the US of A - so it seemed like a good idea to check out what air fares and travel deals might be like.

Almost all deals I’ve come across seem to be for group tours - and this is the funny thing - they don’t seem like deals at all! Thomas Cook for instance, prices a 14 day US holiday starting at Rs. 86000 + USD 2975, and most other packages seem to be in the same league. (Note the clever use of Rs. 86000 + USD 2975 - effectively this works out to almost Rs. 200,000 but then, USD 2975 seems like a smaller number!)

Airfares for individual travellers are about Rs. 60,000 return to most American cities, and one can get a reasonable US hotel for $100 per day (that’s approximately another Rs. 75,000 for 14 days, and that’s for 2 people) - so Rs. 200,000 still seems like a lot of money considering that many expenses will be lower when divided among a group of people. (No doubt, Thomas Cook will be getting much, much lower rates from hotels, cruises, local buses, restaurents and so on). In fact, I think that group tours ought to be cheaper than independent travel.

To my mind, group tours have a number of disadvantages - things are pre-planned, you can’t spend more time at a place if it interests you and god help you if you find the group you are stuck with annoying or just not your type. What’s interesting is that Thomas Cook (and presumably other tour operators) are willing to get people to pay higher prices than they should otherwise, and this tell us something about how there is no one “right price” but simply a price that is right for a particular consumer.

Among some of the reasons why people might pay a premium for a group tour that offers little independence or flexibility -

- Everything is taken care of - for those who haven’t travelled abroad before or are unfamiliar with English, or for older people unused to planning over the Internet, this can be a big plus.
- Indian meals - again, particularly important for vegetarians and Jain vegetarians (which explains why Gujaratis are a big part of the group tour circuit)
- Safety - no worries about landing up in a ‘bad’ part of town/getting lost etc.

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2. Lessons from Being My Own Boss (Part 2)

apu Entrepreneurship, Travel Tales