Preferred Pricing Technique Used in Tourism Small and Medium Enterprises in Badung, Bali, Indonesia

Abstract

This research aims to examine various pricing techniques used in 3 types of tourism small and medium enterprises (SMEs) as well as to identify dominant techniques applied in support to sustainable business and tourism. The method used is qualitative method by means of interviewing pricing decision makers in tourism SMEs in Badung regency, in Bali. The results showed that there are 5 techniques used by Tourism SMEs, in Badung regency; among those, 2 pricing methods are dominantly used, these include: the accommodation and transportation businesses are more dominant in using competitor-based pricing techniques, whilst for restaurant business generally using cost-plus pricing techniques. Except for the motor/car rental, which has methodically assessed the financial sustainability of the business by devising ‘breakeven point’ pricing technique, the others still use a traditional way of common sense and gut feeling in assuring the sustainability of the business and the return of the investment. ‘Competitor-based pricing’ becomes the most preferred technic of tourism SMEs, however entrepreneurs should also apply long-term oriented pricing that ensure the profitability and sustainability of the business, as well as deliver value for customers. ‘Value-based pricing’ is practiced by one business respondent – an accommodation provider. This could be used as a reference by other tourism SMEs, as this shows customer orientation and uses quality as an advantage to compete and survive. To be able to operate in this domain tourism SMEs need to offer quality products, have customer service orientation and use them as a ‘competitive advantage’. The research results could become a reference for tourism SMEs in setting prices for sustainable enterprises. Academically, it will enrich the knowledge about tourism that related to product-costing particularly in tourism SMEs.