KillerApps Micro: Pricing Strategy
Free public goods with close to zero marginal cost could profit from partial excludability.
The pay-what-you-want model makes economic sense when it is used as a limited-time promotion and as a loss-leader to increase sale of higher profit-margin related products.
Fruit vendors may choose perfect competition or pricing power depending on foot traffic and other locational advantages.
Death-postponing cancer drugs command high prices because of the third-party payment health insurance system.
Mail-in rebate coupons succeed in promoting sales at relatively low cost because of low redemption rates.
Innovative products offering high customer value should command value-based prices rather than cost-plus prices.
The middleman role of music labels to produce, distribute, and promote albums has been compromised by the Internet to the benefit of the artists and consumers.
To enhance profit, businesses often sell non-interoperable versions of the same products in different markets.
Free or subsidized parking has suffocated the development of mass transit and increased traffic congestion and air pollution.
Loss leaders might conceal punishing fee traps for the unwary myopic consumers.
Flat-rate pricing may increase the bottom line of businesses when consumers over-estimate the amount they might consume and under-estimate the cost of un-restrained use.
Price hike is difficult to sustain in commodity business with many competitors.
Super-sizing fast-food items boosts both the bottom line and the waistline.
Mixed bundling, by offering a package deal as well as separately priced items, can be a revenue-maximizing pricing strategy in the face of varying customer needs.
Unbundling the intellectual content from the physical embodiment of textbooks might lower the prices of textbooks.
The Internet has made it possible to replace fixed pricing with flexible pricing based on changing supply and demand conditions. Spot pricing will lead to a more efficient market with winners and losers.
Sports teams and other entertainment promoters use online secondary ticket auction market to compete with scalpers while sticking to uniform pricing for the primary market.
Peak-load pricing can lower electric bills and increase business profitability by inducing household consumers to shift their consumption from higher-rate peak period to lower-rate slack period.
Charging motorists for contributing to rush-hour congestion may be economists' dream of internalizing negative externality on toll roads but politicians' nightmare when competing highways are free.
The pricing strategy of charging premium prices for business travels and deeply discounted prices for leisure travels has fallen apart amid a slowing economy and fear of on-air terrorist attacks.