168. Baking it Down - Alotta Parking Lots

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🚶‍♂ Alotta Parking Lots - Volume-based pricing versus high pricing.
In this week's Baking it Down Podcast - Episode 168 - Alotta Parking Lots, Corrie wanted to talk... well, parking lots.
🌴 We took off from the podcast last week to visit VA Beach (love that beach if you're passing through the great state of Virginny). There's a three-mile strip that runs along the oceanfront where hotels, restaurants, and shops are lined up as far as you can see (or walk). In between this sea of spending, there are parking lots for the endless number of cars driving to spend the day feasting and beaching.
🚗🚕🚙 Some of the parking lots have better beach views (🌞 you know - for when your car apparently wants to relax /s) than even some of the restaurants! And some parking lots felt like they were a 3-hour walk to the destination. Pricing for parking spots ranged from $5 - $30 depending on where the lots were and at what capacity they were at. Prices also went up the closer to the weekend it got (gotta love surge pricing). By Saturday Night, the boardwalk is absolutely packed with people (and their parking spots).
This begs the question - 🤔 how can all the parking lots be marketing money when some charged $50 and others charged $5? Are some parking lots working at a loss? Are some lots price gouging?? What gives??
Simple - 🔪 far-away parking lots are operating with razor-thin margins but working at higher sales volume, and featured parking lots charging a premium to cover all of their add-ons (and proximity) but serving fewer cars = higher margins and lower volume.
In essence - both parking lot pricing structures can result in profitable parking businesses. As long as the parking lots' costs are covered (electricity, asphalt upkeep, parking attendee, towing contract), both models produce a profit (a key when it comes to surviving in business).
🤔 "But why wouldn't the cheap lot just charge more? Sounds like people are willing to pay it."
💵 The parking lot charging less often does so because it costs less to run it. 💸Think: 🚙 hiring a parking attendee with 20 years of valet experience versus a college kid on summer break who doesn't know how to parallel park.
Same with parking lot lighting. 💡 The high-end lot we ended up parking in (because it was the only one servicing our hotel) had automatic motion sensor lights in their covered multi-story garage whereas the cheap lots off the strip had next to no lighting at all. Security gates, parking passes, in-and-out privileges - it's easy to see the cost savings versus the cost splurging.
But here's the thing: all the parking lots were full. 🚘🚖🚔🚖🚘🚖🚔
The ones 4 blocks off the strip ✨and✨ the ones right on the beach were all filled with their target demographic. And the overpriced lot we parked in? So full, in fact, they were sending folks to the cheaper lots and shuttling them over.
Same with bakeries.
As long as the costs are covered (math says you can't run a business at a loss), you have bakers who charge a little ✨but✨ make up for it with their high volume of orders, and bakers who charge a ton - which limits their leads - ✨but✨ they have such high margins built into each order, they're still profitable.
You pay the pied piper one way or another. Either working by baking more or working by marketing more. It's up to you, your personality, and your expertise as to which you prefer to be.
🙅 An introvert may like to charge less per order if it means they don't have to speak at a chamber meeting. 🙋 An extrovert may prefer giving a 10-minute presentation and raking in corporate leads if it means they don't have to be stuck in the kitchen for the next month.