Why is the same product almost always priced differently?
A few examples… The price of a beer from a shop in New York City averages $2.00. It’s priced as low as $1.50 and as high as $2.50. You can find those prices and everything in between on a short walk around New York City. Flight prices go up and down depending on lots of factors related to the shopper and the market. Hotel rooms, too.
Question: “Why don’t shops, airlines and hotels just charge the same price to everyone and forget about it?”
Answer: “They would lose money.”
In New York City the people who pay $1.50 for a beer won’t buy if the price is higher. The people who pay $2.50 are happy to pay more than average. Setting the price at $2.00 would cost the shop owners both lost sales and lost revenue.
We’re building algorithms to identify differences among shoppers and give each one the right price. Our goal is to stop losing sales and stop losing revenue caused by giving the same price to very different shoppers. It is extremely challenging. Much more difficult than we thought it would be. But we have a negative emotional reaction to losing money. So we’re scratching our itch.
Request an invite to the Vendo Revenue Management (Beta) to stop losing money today.