As the curator of a butterfly sanctuary that is running low on funds, it is my responsibility to make a decision on the best way to increase the revenue. In such cases, there are typically two options that may help solve the problem and make the business more profitable. First, it is possible to lower the price of admission and hope that more regular and new visitors will be attracted, which can increase the revenue. Second, one would recommend raising the ticket price, and this is also a promising option. In order to choose the most beneficial one, it is necessary to analyze the current market situation and use the concepts of elasticity and demand.
To begin with, the present regulations and circumstances caused by the coronavirus pandemic make people save money and spend them mostly on necessary goods and services. Unfortunately, many persons lose their jobs, and visiting a butterfly sanctuary is considered an unnecessary luxury for everyone except those who study butterflies, and there are few such individuals. Therefore, this is probably why the sanctuary is running low on funds – it does not have many visitors.
There is also a very helpful concept known as elasticity or inelasticity of demand. The former relates to the situations when demand for a good or service changes when another factor, such as price, is also changed (Hall, 2021). On the contrary, the latter means that there are slight or no moderations in the demand (Hall, 2021). Thus, before the butterfly sanctuary decides to lower the price of admission, it needs to make sure that the demand is elastic, and the reduction of price will actually cause an increase in visitors attracted and tickets sold. At the same time, if the demand is inelastic, it is recommended that the sanctuary makes the prices higher so that this change will not affect the number of visitors, but the revenue will be increased. Considering the current market situation and the fact that visiting the butterfly sanctuary is a luxury, it is probably better to lower the prices.
Reference
Hall, M. (2021). Elasticity vs. inelasticity of demand: What’s the difference? Investopedia.