Archive for the ‘Price customization’ Category

Amazon and the “power of free” …

July 24, 2018

Over the weekend, Bernie Sanders and NY Dem Congressional candidate Alexandria Ocasio-Cortez were barnstorming deep-red states with their Progressive platform: Medicare for all, free college, minimum wage, guaranteed job, etc. Source

Many dismiss the ideas as unaffordable pie-in-the-sky.

But in class, I always preached: Don’t underestimate the “power of free”.

Here’s a real life example to prove the point.

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Everybody knows that Amazon’s free shipping program has been a resounding success.

So much so. that the company has announced that it will be moving the minimum qualifying order up from $25 to $35 … inducing shoppers to fill  their carts fuller or switch to the highly profitable Amazon Prime program.

The free shipping program’s success was highly predictable based an an apparently inadvertent “matched market test” that Amazon did.

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Here’s the skinny on the Amazon’s inadvertent market test …

(more…)

Gotcha: Using your own genes against you …

May 2, 2018

 NPR says …

“Getting the results of a genetic test can be a bit like opening Pandora’s box … you might learn that you’re likely to develop an incurable disease later on in life.”

There’s a federal law that’s supposed to protect people from having their own genes used against them, the Genetic Information Nondiscrimination Act, or GINA.

Under GINA, it’s illegal for health insurers to raise rates or to deny coverage because of someone’s genetic code.

image

But the law has a loophole: It only applies to health insurance.

Some insurance can be denied or priced high because of a person’s DNA.

Here’s an example … and a prediction.

(more…)

Buying your airplane seat “by the inch”…

April 8, 2016

Loyal readers know that I’ve been a long-standing fan of airlines charging by the pound rather than having a flat fare that is applied to all passengers – small, big and supersized.

Here are some ‘greatest hits’ posts on the topic.

Prices: Why don’t airlines charge more for these bags?

Norwegian economics professor jumps on the scale … endorses “pay what you weigh”

Air fares: Public weighs in …

Tipping the scales: Airline starts weighing all passengers …

Airlines weigh-in on cost-cutting ……

Let’s continue the dialogue.

According to The Economist ….

The average American man bulked up from from 166lb in 1960 to 190lb today, while the average woman jumped from 140lb to 166lb.

Note: That today’s average woman weighs about the same as an average man in the 1960s.  Whoa, Nellie!

While Americans were ballooning, airline seats’ widths were constricting —   from 18 inches in 1960 to 16.5 inches today.

To address the obvious issue, Congressman Steve Cohen proposed a law  mandating a minimum amount of seat space for air passengers.

The measure failed.

 

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Very clever cartoon from The Economist

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Not to worry, airlines are on the case.

We’ve previously reported on airline programs to charge passengers by-the-pound.

Now, there’s a new tactic being pursued …

(more…)

Airlines weigh-in on cost-cutting ……

December 23, 2015

Let’s end this week on a lighter note (<= pun intended).

Loyal readers know that I’ve been a long-standing of airlines charging by the pound rather than having a flat fare that is applied to all passengers – small, big and supersized.

Here are some ‘greatest hits’ posts on the topic.

Prices: Why don’t airlines charge more for these bags?

Norwegian economics professor jumps on the scale … endorses “pay what you weigh”

Air fares: Public weighs in …

Tipping the scales: Airline starts weighing all passengers …

Applying the principle, GoAir, an Indian low-cost carrier, now only hires female flight attendants because they are on average 10-15 kg lighter than men. Less weight means less fuel-burn, lower costs, more profit.

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According to The Economist, it’s just one of the ways that airlines are shaving costs these days.

(more…)

Amazon and the “power of free” …

November 13, 2015

Yesterday in class, I mentioned some work by Chris Anderson of Wired on the “Power of Free”

Free: How Today’s Smartest Businesses Profit by Giving Something for Nothing

Here’s a real life example of the power of free.

======

Everybody knows that Amazon’s free shipping program has been a resounding success.

So much so. that the company has announced that it will be moving the minimum qualifying order up from $25 to $35 … inducing shoppers to fill  their carts fuller or switch to the highly profitable Amazon Prime program.

The free shipping program’s success was highly predictable based an an apparently inadvertent “matched market test” that Amazon did.

image

=====

Here’s the skinny on the Amazon’s inadvertent market test …

(more…)

What do colleges have in common with Kohl’s?

November 10, 2015

I oft say that anybody who pays sticker price at Kohl’s should look over their shoulder to make sure that Darwin isn’t chasing them.

Maybe the same should be said of parents who pay list price tuition to fund their kiddies through college.

Lots of talk re: how college costs are soaring.

According to the WSJ

Published tuition rates have soared in the last decade, but only a small percentage of families actually pays full freight.

Between grants to needy students and merit scholarships to entice other desirable candidates, schools these days are giving back nearly 50% of gross tuition revenue in the form of aid and awards.

In other words, list prices are going up, but more stuff is being sold at sale prices.

 

image

 

Increasingly, colleges are using pricing methods previously the domain of airlines and discount retailers …

(more…)

College: Nobody pays retail anymore …

October 14, 2015

Lots of talk these days re: skyrocketing college tuition prices.

That’s certainly true of list prices, but these prices are becoming more and more like new car sticker prices – maybe even worse.

According to the latest annual studies done by NACUBO (National Association of College and University Business Officers), approximately 89 % of first-time, full-time freshmen at institutions surveyed received institutional grant aid.

English translation: in most cases, “institutional grant aid” is simply a discount from the tuition’s list price.

And, the discounts aren’t trivial amounts … they are approaching 50%.

Think, half-off sales at Kohl’s

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So, who is paying retail any more?

(more…)

Alert: Mickey is reaching for your wallet …

October 12, 2015

I’m conflicted on this one.

On one hand, I teach pricing strategy in some of my courses.

The explicit strategic goal: increase revenue and profits with aggressive pricing tactics.

On the other hand, I always feel sorry for “average” parents who get creamed financially when they take their kids to a ball game or amusement park.

 

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Based on recent announcements, Disney – Mickey’s parent company – is rolling some pricing tactics to fatten Mickey’s wallet and flatten your’s …

(more…)

Tipping the scales: Airline starts weighing all passengers …

August 17, 2015

You read that right …

Uzbekistan Airways is going to start weighing passengers before flight

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Here’s what’s going on …

(more…)

Amazon and the “power of free” …

July 1, 2015

Everybody knows that Amazon’s free shipping program has been a resounding success.

So much so. that the company has announced that it will be moving the minimum qualifying order up from $25 to $35 … inducing shoppers to fill  their carts fuller or switch to the highly profitable Amazon Prime program.

The free shipping program’s success was highly predictable based an an apparently inadvertent “matched market test” that Amazon did.

image

=====

Here’s the skinny on the Amazon’s inadvertent market test …

(more…)

FTC makes it official: Size matters !

June 30, 2015

Have you ever shelled good money for “free” air.

Bet you have.

It’s called “slack fill”.

Say, what?

clip_image002

Let’s start with a confession …

(more…)

Air fares: Public weighs in …

May 28, 2015

According to a YouGov.com survey reported by  NBC News  …

Survey says: 4 in 10 Americans  wouldn’t mind being publicly weighed at the airport.

image
Source

The results suggest that a once-unthinkable concept of differential fares based on size could become a fact of life for fliers.

Here are some verbatims:

(more…)

Gotcha: Using your own genes against you …

April 24, 2015

 NPR says …

“Getting the results of a genetic test can be a bit like opening Pandora’s box … you might learn that you’re likely to develop an incurable disease later on in life.”

There’s a federal law that’s supposed to protect people from having their own genes used against them, the Genetic Information Nondiscrimination Act, or GINA.

Under GINA, it’s illegal for health insurers to raise rates or to deny coverage because of someone’s genetic code.

image

But the law has a loophole: It only applies to health insurance.

Some insurance can be denied or priced high because of a person’s DNA.

Here’s an example … and a prediction.

(more…)

Smacked: TurboTax bungles a $25 price increase and retreats.

February 19, 2015

A couple of years ago I switched off TurboTax when they tried to start charging separately for each computer – meaning that I had to buy 2 licenses to have TurboTax on both my desktop and laptop.

I got back on the program when they backed off that silly pricing hack.

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Having learned nothing from that pricing backfire, TurboTax recently got itself in another brouhaha with customers when it tried another pricing sleight of hand.

Here’s what went down …

(more…)

What do colleges have in common with Kohl’s?

February 2, 2015

I oft say that anybody who pays sticker price at Kohl’s should look over their shoulder to make sure that Darwin isn’t chasing them.

Maybe the same should be said of parents who pay list price tuition to fund their kiddies through college.

Lots of talk re: how college costs are soaring.

According to the WSJ

Published tuition rates have soared in the last decade, but only a small percentage of families actually pays full freight.

Between grants to needy students and merit scholarships to entice other desirable candidates, schools these days are giving back nearly 50% of gross tuition revenue in the form of aid and awards.

In other words, list prices are going up, but more stuff is being sold at sale prices.

 

image

 

Increasingly, colleges are using pricing methods previously the domain of airlines and discount retailers …

(more…)

Gotcha: Your willingness-to-pay is showing …

December 18, 2014

Punch line: Major retailers are customizing online prices for each user, using users’ information (such as location) to determine different prices for identical items. The goal: higher price realization and higher profits. 

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Here's the scoop ...
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Amazon and the “power of free” …

November 19, 2014

Everybody knows that Amazon’s free shipping program has been a resounding success.

So much so. that the company has announced that it will be moving the minimum qualifying order up from $25 to $35 … inducing shoppers to fill  their carts fuller or switch to the highly profitable Amazon Prime program.

The free shipping program’s success was highly predictable based an an apparently inadvertent “matched market test” that Amazon did.

image

=====

Here’s the skinny on the Amazon’s inadvertent market test …

(more…)

What do colleges have in common with Kohl’s?

October 14, 2014

I oft say that anybody who pays sticker price at Kohl’s should look over their shoulder to make sure that Darwin isn’t chasing them.

Maybe the same should be said of parents who pay list price tuition to fund their kiddies through college.

Lots of talk re: how college costs are soaring.

According to the WSJ

Published tuition rates have soared in the last decade, but only a small percentage of families actually pays full freight.

Between grants to needy students and merit scholarships to entice other desirable candidates, schools these days are giving back nearly 50% of gross tuition revenue in the form of aid and awards.

In other words, list prices are going up, but more stuff is being sold at sale prices.

 

image

 

Increasingly, colleges are using pricing methods previously the domain of airlines and discount retailers …

(more…)

Gotcha: Using your own genes against you …

September 23, 2014

 NPR says …

“Getting the results of a genetic test can be a bit like opening Pandora’s box … you might learn that you’re likely to develop an incurable disease later on in life.”

There’s a federal law that’s supposed to protect people from having their own genes used against them, the Genetic Information Nondiscrimination Act, or GINA.

Under GINA, it’s illegal for health insurers to raise rates or to deny coverage because of someone’s genetic code.

image

But the law has a loophole: It only applies to health insurance.

Some insurance can be denied or priced high because of a person’s DNA.

Here’s an example … and a prediction.

(more…)

Air fares: Public weighs in …

February 24, 2014

According to a YouGov.com survey reported by  NBC News  …

Survey says: 4 in 10 Americans  wouldn’t mind being publicly weighed at the airport.

image
Source

The results suggest that a once-unthinkable concept of differential fares based on size could become a fact of life for fliers.

Here are some verbatims:

(more…)

Gotcha: Using your own genes against you …

February 12, 2014

 NPR says …

“Getting the results of a genetic test can be a bit like opening Pandora’s box … you might learn that you’re likely to develop an incurable disease later on in life.”

There’s a federal law that’s supposed to protect people from having their own genes used against them, the Genetic Information Nondiscrimination Act, or GINA.

Under GINA, it’s illegal for health insurers to raise rates or to deny coverage because of someone’s genetic code.

image

But the law has a loophole: It only applies to health insurance.

Some insurance can be denied or priced high because of a person’s DNA.

Here’s an example … and a prediction.

(more…)

Gotcha: Your willingness-to-pay is showing …

December 18, 2013

Punch line: Major retailers are customizing online prices for each user, using users’ information (such as location) to determine different prices for identical items. The goal”higher price realization and higher profits.

* * * * *
Excerpted from WSJ’s, “Websites Vary Prices, Deals Based On Users’ Information”

BLOG

It was the same Swingline stapler, on the same Staples.com website.

But for Kim Wamble, the price was $15.79, while the price on Trude Frizzell’s screen, just a few miles away, was $14.29. 

(more…)

What’s the price? … and more tales from the ObamaCare web site.

October 16, 2013

The ObamaCare website and its underlying inter-connected legacy systems are going to be legendary for apparent IT ineptness.

A case study in how not to develop and launch new systems

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Why isn’t the system able to do the basics?

You know: log people in, tell them the price, sign them up and, oh yeah, keep people’s private information secure.

Some of the problems are structural … what happens when you try to inter-connect old legacy systems … each with a humongous, uniquely-designed database.

Other problems are self-inflicted … either amateurish design or intentional strategic specifications built into the design.

As a recovering systems designer and CIO — and, oh yeah, a pricing prof — here’s my take  ..

(more…)

What do colleges have in common with Kohl’s?

October 14, 2013

I oft say that anybody who pays sticker price at Kohl’s should look over their shoulder to make sure that Darwin isn’t chasing them.

Maybe the same should be said of parents who pay list price tuition to fund their kiddies through college.

Lots of talk re: how college costs are soaring.

According to the WSJ

Published tuition rates have soared in the last decade, but only a small percentage of families actually pays full freight.

Between grants to needy students and merit scholarships to entice other desirable candidates, schools these days are giving back nearly 50% of gross tuition revenue in the form of aid and awards.

In other words, list prices are going up, but more stuff is being sold at sale prices.

 

image

 

Increasingly, colleges are using pricing methods previously the domain of airlines and discount retailers …

(more…)

Flashback: Only thin ladies need apply …

July 1, 2013

We’ve previously posted about Samoa Airlines novel pricing programs – charging heavier than average passengers higher fares than average girthed passengers – to offset higher fuel costs to haul them and protect other passengers from “seat encroachment”.

Suffice it to say that readers’ scale tilted away from the idea.

For background, see:

Samoa Air: Pricing by weight is the ‘concept of the future’

Why don’t airlines charge more for these bags?

 

image

 

Well, now GoAir – an Indian airline – has initiated a weight-based program that rolls back the clock to the 50s and 60s.

(more…)

Air fares: Public weighs in …

April 30, 2013

According to a YouGov.com survey reported by  NBC News  …

Survey says: 4 in 10 Americans  wouldn’t mind being publicly weighed at the airport.

image
Source

The results suggest that a once-unthinkable concept of differential fares based on size could become a fact of life for fliers.

Here are some verbatims:

(more…)

Gotcha: Using your own genes against you …

January 23, 2013

 NPR says …

“Getting the results of a genetic test can be a bit like opening Pandora’s box … you might learn that you’re likely to develop an incurable disease later on in life.”

There’s a federal law that’s supposed to protect people from having their own genes used against them, the Genetic Information Nondiscrimination Act, or GINA.

Under GINA, it’s illegal for health insurers to raise rates or to deny coverage because of someone’s genetic code.

image

But the law has a loophole: It only applies to health insurance.

Some insurance can be denied or priced high because of a person’s DNA.

Here’s an example … and a prediction.

(more…)

Gotcha: Your willingness-to-pay is showing …

January 17, 2013

Punch line: Major retailers are customizing online prices for each user, using users’ information (such as location) to determine different prices for identical items. The goal”higher price realization and higher profits.

* * * * *
Excerpted from WSJ’s, “Websites Vary Prices, Deals Based On Users’ Information”

BLOG

It was the same Swingline stapler, on the same Staples.com website.

But for Kim Wamble, the price was $15.79, while the price on Trude Frizzell’s screen, just a few miles away, was $14.29. 

(more…)

Sucka Alert: It’s after 5 p.m., so the price is higher…

October 18, 2012

Excerpted from the book Pricing Segmentation and Analytics by Bodea and Ferguson

One example of using price segmentation in the price analytics process has been applied at a grocery store chain.

Previous studies have shown that consumers who shop at a grocery store after 5 p.m. on weekdays are generally less price sensitive than consumers who shop on weekdays before 5 p.m.

This finding is intuitive as the consumers who are shopping after 5 p.m. are generally working professionals who are on their way home from work and do not bother to comparison shop, while consumers who shop before 5 p.m. consist of homemakers and retired individuals who, conceivably, are more price conscious and have more time to comparison shop.

To take advantage of this knowledge, there is a grocery store chain in Texas that raises the prices of almost all items after 5 p.m. on weekdays and lowers them again before opening the next morning.

I’m a strong advocate of “dynamic pricing” but this one gives me the creeps … I’d like to be a fly on the wall when customers catch on to the pricing scheme.

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