I have written many times about pricing and how difficult it is to really determine the “best price”. As a matter of fact, that new firm I told you about is dealing with that issue right now. If we price our product too high, sales are cut- and while the margins can be fantastic, we don’t sell enough to be profitable. If we price the product too low, we need to sell millions to make enough money. (Besides the fact that one would be leaving significant funds “on the table”.)
So, I was thrilled to hear what certain government agencies are doing. Yes, they are considering the ‘sweet spot” for some of their services.
Consider Idaho. The recession (and the fact that Republicans are in total control of the state) made the state cut budgets left and right- maybe even up and down. The Department of Parks and Recreation (IDPR) now operate with about 20% of the budget they had before the bank failure fiasco.
Before the recession, IDPR used to sell $ 40 season’s passes for the state parks. And, they sold about 15,000 of them to those who were interested. Which is not a great percentage of the 2.5 million vehicle owners, who could be eligible to display that sticker for entry to the parks.
When their budget was cut, IDPR decided that a new approach was necessary. Instead of offering a season’s pass, they opted for a “parks passport” to afford entry to all 30 state parks. And, 95,800 state denizens thought that price was perfect and bought one.
Consider the facts. The cost to maintain the parks is pretty immaterial of the number of users. (Oh, I know there are higher clean-up costs, but they are pretty small compared to the other facts of park ownership and maintenance.) And, pre-recession the IDPR garnered some $ 600,000 in user fees to defray the costs. By lowering the price of admission to $ 10, IDPR is now receiving some $958,000 to defray the costs, an increase of 40% (albeit not as much as the 80% cut to their revenue).
Idaho is not alone, although their method of approach seems to be. Across the US, the state funding for parks has decreased to about 33% of their total revenue. Which happens to be almost half of their funding from barely 20 years ago (when they received almost 60% of their costs from state funding).
Michigan and Montana actually preceded the IDPR with their recreational passport system. And, their concept is more intrusive. When you register your car in Michigan (since 2010), you must decide if you want to pay the $ 11 passport fee for access to the more than 100 state parks or 75 boat launch sites. This increased the “participation” rate from 17% (of the 7.5 million vehicle owners) to 24.7% and last year’s 27.3%. The goal for participation this year is 28%- and there are significantly more car owners this year than in previous years.
Montana started their programs in 2004, which automatically imposed a $ 6 state parks fee on each vehicle registration. (Their claim- it’s cheaper than a movie or two straybucks coffees.) Theoretically, one can opt out, but it’s not easy. You have to wander into the county treasurer’s office and sign and waiver averring you will never visit a state park. Yeah, I can see that happening a lot.
Kansas and Washington also do likewise. Kansas hits you up for a $ 15.50 fee when you register your vehicle. If you don’t pay up then, you will need to spend $ 25 at a government office or park to buy the permit. Washington’s Discover Pass runs $ 30- with pitches to donate even more money to the state park system.
My own state, the Commonwealth of Virginia, has decided that credit card transactions now cost $ 5, as do all park reservations. I admit that I don’t participate in the use of these parks, relying more on the Federal parks (the Blue Ridge Parkway, the George Washington National Forest)- which have greatly upped their fees, or the local parks of Alexandria and Fairfax.
But, that seems to be the rule for the future. Nowadays, state parks are heavily reliant upon park-generated fees. But, the IDPR, Michigan, and Montanan thinking has not permeated the rest of the states. Maybe now they will.
