IBM Dynamic Pricing enables merchandisers to create and optimize pricing strategies in real time to out-price the competition. This cloud-based offering automatically recommends an online retailer's optimal response. It combines web data, such as page views and cart abandonment--along with sales, inventory and the latest competitive pricing information--and uses pricing intelligence to recommend the optimal pricing action to achieve your business goals.
Last month, MoviePass CEO Mitch Lowe announced that surge pricing would soon go into effect, charging customers a little extra for movies and showtimes that are especially popular. That added fee, which MoviePass is calling Peak Pricing, starts rolling out today to customers with a monthly plan as well as any new annual subscribers. When a film or a particular showtime is in high demand and subject to an additional fee, you'll see a little red lightning icon over the showtime. Any showtimes that are gaining in popularity and could have an added Peak Pricing fee soon will have a grey lightning icon above them. If you want to avoid the fee, you'll have to select another showing, but if you stick with the high-demand showtime, whatever credit card you have on file with MoviePass will be charged.
With so many variables it is extremely complex and time-consuming to determine competitive prices that add to the bottom line and also benefit the final consumer. With low-profit margins per unit, assigning the optimal price to a CPG is a matter of competitive advantage. A combined research by Nielsen, McKinsey, and GBA has revealed that'Pricing winners who adopted best practices in devising a pricing strategy were able to increase unit prices by 1.2 percentage points more than the category average. At the same time, they gained share by growing sales by almost a full percentage point ahead of their peers.' While some best practices are technology interventions, others are about partnerships.
Basically, this means determining the most your customer would be willing to pay for your product or service. Value-based pricing is less effective in very heavily saturated market, where you are more likely to be undercut by another business. Ideally, you should be able to offer higher quality, more convenience, or more streamlined experience in order to succeed with value-based pricing. An example of value-based pricing would be if you were a website designer who typically charges by the hour. As you become more skilled and can offer a high-quality product in a few hours, you may be designing a client's entire website in half a day at a bargain rate.