by

Revenue Management Application on Karaoke Industry in Taiwan

Industry Overview
The Karaoke culture is popular in East Asia. Unlike the karaoke in bars/clubs offered publicly, the karaoke style here I want to discuss is the one has private rooms for different size of parties, and that is why the concept of Revenue Management can be applied broadly in this industry. I will specifically focus in Taiwan, because the karaoke culture in Taiwan is mature, and the company even expand the business to other countries.

           

The word “Karaoke” is originated from Japanese, so is the culture. Karaoke is firstly developed in Japan in 1970’s and then expanded to other countries in Asia in 1980’s, but the origin of the idea is obscure. Reference: http://en.wikipedia.org/wiki/Karaoke

 

In Taiwan, karaoke plays an important role in people’s nightlife. It’s the place for family, friends, colleagues, and even doing business. The karaoke industry in Taiwan is dominant by one company which has two different brands, one for higher class (more expensive) and the other one for lower class (cheaper). Higher class brand charges more with its glorious and hotel-look lobby, fancier private room decoration, more delicious food, and convenience (in-room restroom). There is another premium venue of that company that doesn’t see as a brand but more like a status, because it is limited to members, and joining the membership is by invitation (http://www.cashboxvip.com/viprespect.html). Thus, people start to consider going to karaoke as a luxurious entertainment, not to mention it seems to be a trend for the hotels in Hong Kong and Macau to design presidential suites with an “entertainment room” when we visited last June. Since people can easily spend hours in karaoke, the revenue can be generated in many ways. I will discuss the application based on my observations and experiences in Taiwan, and karaokes in Taiwan also do a better job than karaokes in Singapore on applying revenue management.

(Website of karaoke in Singapore:

a. http://www.partyworldktv.com.sg/promotion-29305210352041938144.html

b. http://www.kbox.com.sg/StaticContent.aspx?u=6)

         

The following are the overview of basic levers applied in Taiwan:

Space: (not applied in Singapore)
Karaoke has limited capacity, as the number of private rooms are fixed. Also, the size of the private rooms usually vary from small for 3 to 4 people to party size, 18-20 people, or even super party size for up to 35 people.


Time:
The time slot is limited, but the minimum consumption unit vary as the size of private rooms. Usually the rack rate is charged by hour, but promotion packages are charged based on 3-hour consumption, and you can extend by hour as the basic unit.
Also, karaokes apply dynamic pricing according to peak/off-peak hour and high/low season. The prices are differentiated by time of day, day of week, and month of year.


Occupation: (not applied in Singapore)
In Taiwan, students and senior are privileged for cheaper price. People older than the age of 55 are able to enjoy senior discount, as 55 is the minimum age to retire in Taiwan. The reasons may be students are more price-sensitive, but they also have more free time to spend in karaokes, and seniors also have more free time once they retire.
(Unfortunately, the website of the dominant company is in Mandarin, but I think you can still figure out how variable their prices are! Variable pricing charged by per person: http://www.cashboxparty.com/ktv/web_ktv/web_ktv.asp
Rack rate charged by hour per room: http://www.cashboxparty.com/ktv/map/price/kp17.html)

The Levers
SPACE
The inventory unit for karaokes is private room. A karaoke can be as big as a maze with narrow hallways and unorganized directions so it can utilize the space to its maximum. Karaokes define the space implicitly, because the size categories vary according to the space of each branch. Likewise, the capacity of private rooms varies in different branches. The following are the different private room sizes of the biggest karaoke branch in that company:
Small – 2 to 7 people
Medium – 8 to 10 people
Medium big – 10 to 12 people
Big – 12 to 15 people
Super big – 15 – 18 peope
Party size (“Presidential Suite”) – 18 – 35 people

                           
Other utilizations of space:
a. Other than the main revenue generator, private rooms, karaokes utilize spaces for a major human need, food. Consumers not only can order in-room dining in a la carte style, but also can go to buffet area for all-you-can-eat service. Of course the delicacy level is depending on the class of the brand.

b. Another space utilization for karaoke is to selling company-branded products, such as stationary or products signed by famous singers, but it accounts for a very little part of the revenue.

c. In one of the signature karaokes of this company, there is a restaurant serving Cantonese Dim-Sum inside the karaoke. It is a rare but a brilliant concept. For people who go to karaoke but is not that into singing, they may go to that restaurant so they can eat food at the table with more comfortable height. Also, after an all-night singing, people in Taiwan like to have either a late night snack or early breakfast before dawn. The idea of the restaurant can attract people who bother which restaurant to go to. http://www.cashboxparty.com/ktv/cashboxdining/

         
Karaokes tend to save spaces for private rooms, as the more parties they can accommodate, the more revenue it can generate. To increase more revenue by using space, both brands may consider charging private rooms according to the distance to buffet area. The closer to buffet area, the more expensive the room rent, since people can save more time on going back and forth for food and drinks.

TIME
Karaoke sells time explicitly. The prices are either charged by per private room per hour, or by per person per certain time slot (ex. by per person for 3 hours). The pricing differs as follows:
a. Hour – separate a day into 5 different slots: (http://www.cashboxparty.com/ktv/map/price/kp17.html)
07:00-10:59 – the cheapest
11:00-15:59
16:00-17:59
18:00-19:59
20:00-22:59(Sunday to Thursday) 20:00-01:59(Friday and Saturday) – the most expensive
23:00-06:59(Sunday to Thursday) 02:00-06:59(Friday and Saturday)

b. Day of week
As what I mentioned above, Friday and Saturday are considered as “peak season”, and Monday to Thursday are “off-peak season”. The pricing for Sunday is slightly higher than weekdays but much lower than Friday and Saturday.

c. Month of year
This pricing differentiation is specially catered to student groups. Since students in Taiwan have winter vacation (3 to 4 weeks long in January and February) and summer vacation (8 to 9 weeks long in July and August), it is less often for students to go to karaokes with friends or classmates.

d. Special holidays
Public holidays are considered as peak season for karaokes, such as Christmas and spring break (can last from 3 – 5 days to celebrate Tomb-sweeping Day and Children’s Day)

Apart from the above explicit specifications of time, I suggest karaokes can consider to charge implicitly by the number of songs. It is not uncommon that the time we pay for the private room is about to end, but my favorite song is not played yet. If people can pay by songs, then such situation can be avoided and customers can also leave without pity.


PRICE
Karaoke uses physical and non-physical rate fences to differentiate its pricing, but the application of physical rate fences is far less than non-physical.
a. Physical rate fences are the size of private rooms, minimum charge for party size private room, and location of the karaoke branch. It is obvious that karaoke locating in downtown business area or in prime cities can charge higher than other locations. (Minimum rental list for Presidential Suite: http://www.cashboxparty.com/ktv/act/1001118_17/)

b. Non-physical rate fences are occupation (student), age (senior and birthday discount), membership (membership of karaoke and certain credit card holder), and time.

Other non-physical rate fences that I think is doable are advanced reservation and distance to buffet. To manage inventory more efficiently, karaokes can consider charge slightly higher for walk-ins in peak hour or hot season. Also, as what I have mentioned, it is possible for people to pay more for a private room which is closer to buffet area.

48,914 thoughts on “Revenue Management Application on Karaoke Industry in Taiwan”

  5. Media Kits

    At Boutique Social Media, we offer a comprehensive suite of services. From crafting detailed media kits that elevate your brand story to developing a cohesive social media strategy, we cover all aspects of your digital presence. Our monthly social media posts and management services keep your audience engaged, building a strong online community around your brand.

  6. It’s very thoughtful of you to provide this forum. It’s really helpful, in my opinion! I have received a great deal of help from this website and many others that I have used as tools. Individuals who are just getting started in this field will discover that there aren’t many websites that are ready to help.

    here are some more informative websites that helped me

  10. Attractive, post. I just stumbled upon your weblog and wanted to say that I have liked browsing your blog posts. After all, I will surely subscribe to your feed, and I hope you will write again soon! muka lu kayak babi

  11. White Chandelier

    Metavaya is an innovative online retailer specializing in high-quality, sustainable lighting solutions. Founded in the San Francisco Bay Area, the company emerged as a leader in making exclusive design products accessible online, especially for those seeking eco-friendly and long-lasting options. Metavaya offers a wide range of meticulously curated lighting fixtures, including floor lamps, wall lamps, table lamps, chandeliers, and unique light sculptures, emphasizing both functionality and aesthetic appeal. With a mission to provide premium products at affordable prices, they cut out unnecessary markups, ensuring value for their customers. Committed to excellent customer service, Metavaya serves both residential and commercial clients, collaborating with interior designers, architects, and construction professionals. Born in 2021, Metavaya continues to enrich spaces with beautiful, minimalist designs, available exclusively on their website.

  28. С легкостью окунитесь в захватывающий мир азартных игр. Откройте для себя казино с самым высоким рейтингом, эксклюзивные бонусы и обзоры экспертов вместе с kent zerkalo, чтобы получить непревзойденный опыт онлайн-гемблинга.

  29. Vaginal Health Care

    La Miiel, a visionary in women’s intimate health, offers a revolutionary product: the La Miiel Intimate Serum. Developed by top medical professionals in Korea, this serum represents a blend of scientific innovation and time-honored natural remedies. It’s formulated with 100% organic ingredients, featuring a unique combination of nano essential minerals and probiotics, designed specifically to cater to various fundamental vaginal health concerns.

  30. представляет собой онлайн-платформу, где игроки могут наслаждаться различными видами азартных игр. С казино Kent, доступным в Интернете, игроки могут исследовать мир игровых автоматов, покера, блэкджека, рулетки и других игр. Каждая игра имеет свои уникальные особенности, делая игровой процесс захватывающим и разнообразным. впечатляет своим стильным и привлекательным дизайном.

  32. electrician wellington

    Trust Astral Electrical as your local electrician in Wellington. We have the knowledge and expertise to get the job done right. Call us when you need reliable, top-quality electrical solutions. Get results that are tailored to your needs at an affordable price.

  44. nursery wallpaper

    Our removable wallpaper is perfect for redesigning your home decor and entire room, creating accent walls, decorating furniture, etc. Our wallpapers are high quality, thick, durable and washable. Easy to apply, fully removable and repositionable, and safe for renters. For long and short-term applications, stain- and tear-resistant. Made in USA.

  46. https://expertcivil.com/revolutionising-road-borders-with-resin-bound-edging-strips/

    I’m a writer from the UK, I recently wrote about the Use of Resin Bound Edging Strips to Transform Road Borders. Finding materials that are both aesthetically pleasing and functionally sound is an ongoing challenge in the road construction and urban planning industries. Here we have resin-bound edging strips, a product whose outstanding attributes are quickly making it popular in the UK. This isn’t your average building material; it’s going to revolutionise the way we see road lines and borders.

  50. CBD Edibles

    National Hemp Service are a UK based store in London and also selling online. Providing the highest quality CBD oils, edibles and topical creams/balms. With over 4 years of experience in the industry, they offer their own range of CBD products as well as a variety of the best brands available at competitive prices. Thousands of people all over the country trust them due to their expert knowledge and friendly service.

Leave a Reply

Your email address will not be published. Required fields are marked *