Pricing the Airport Lounge
A walk-in lounge with empty sofas and full flights outside. Set the price.
The Prompt
Your client operates a 200-seat premium lounge in a major Indian airport's domestic terminal. Today 80% of guests enter free via credit-card programmes that reimburse the lounge ₹650 per visit. The operator wants to launch walk-in paid access and asks: what should the price be?
Opening exchange
Pricing needs three anchors: cost floor, competitor reference, and customer value ceiling. But first — what's the objective: maximize walk-in revenue, fill off-peak capacity, or protect the card-programme relationships that pay the bills?
Primary: incremental revenue. Constraint: do nothing that makes the card networks renegotiate below ₹650. Current occupancy: 45% off-peak, 95% at morning and evening banks.
The constraint is the interesting part — a public walk-in price becomes a reference price for the card networks' next negotiation.
That constraint cuts deep: if we post ₹500 walk-in, the card networks will ask why they pay ₹650. So the walk-in price must sit above ₹650 — it's not just demand math, it's protecting the existing book. Let me build floor, reference, and ceiling, then segment by time of day.
Structure & Hypothesis
Analysis & Data
Give me a number, and deal with the 95% peak problem.
Headline price ₹1,399 — top of the competitor band, justified by showers and à-la-carte dining, comfortably above the ₹650 contract reference. But at peak banks the lounge is nearly full of card guests, so walk-ins would degrade the experience that justifies ₹650. So: walk-in sales are off-peak only by default, via a slot-based app purchase. At peak, either close walk-ins or price at ₹1,999 with a guaranteed-seat promise, capped at, say, 15 passes per bank.
Time-based segmentation falls straight out of the occupancy data — price isn't one number, it's a policy.
Estimate the annual walk-in revenue at your prices. Assume 25 off-peak walk-ins/day and 20 peak passes/day sell.
25 × ₹1,399 ≈ ₹35,000/day off-peak; 20 × ₹1,999 ≈ ₹40,000/day peak — ~₹75,000/day, ~₹2.7 crore/year. Variable cost ≈ 45 guests × ₹280 ≈ ₹12,600/day, so ~₹2.3 crore incremental contribution. Modest but nearly pure margin on existing fixed costs — and zero risk to the ₹650 book since both prices sit far above it.
Recommendation
Recommend
- Launch walk-in at ₹1,399 off-peak (app-based, slot-limited) and ₹1,999 guaranteed-seat at peak, capped per bank.
- Never discount below ~₹1,100 publicly — the visible walk-in price is the card networks' next negotiating anchor; protect it.
- Bundle experiments upward, not downward: +₹400 shower add-on, +₹600 meal upgrade — lifts realized value without touching the headline.
- Review after one quarter against two metrics: pass sell-through and card-guest satisfaction scores at peak.
Key Takeaway
What this case teaches
Build the band — floor, reference, ceiling — but always ask who else sees this price. When an existing B2B contract references your public price, that contract becomes the real floor, and segmentation by time becomes how you serve new demand without breaking the old book.