Price

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Slides: Price

Price: value that is exchanged.

WhatsApp Used This Pricing Strategy to Win and You Can Too

Trends:

• Increased competition & transparency (price comparison apps): Shopping apps to hunt down the best deals
  • why ?
  • how ?

• Increased agility to set the right price:
  • Cost structure (fixed versus variable) provides flexibility (Netflix tests cheaper subscription as Amazon looms)
  • Price discrimination
  • Dynamic Pricing (airlines, auctions)
    • Surge pricing: In Praise of Efficient Price Gouging
  • Customer sets price: ex: Priceline
  • Micropayments: iTunes 99 cents
  • Reduced Information asymmetry (Freakonomics, Information Asymmetry, and the Internet), shift in pricing power to the consumer

• arbitrage (books in foreign markets resold to domestic market)
• Free, to establish lock-in (social networks)
• Subsidized
• Freemium, multi-tiered pricing
• from Free to Subsidized (evolution of social media business models)
• Price bundling

New Payment Systems

Apple Pay, and its impact on shaping mobile payments in the US

Online first, mobile, and offline solutions

• PayPal (Mobile), PayPal agrees to acquire Braintree for $800 million
• AmazonPayments
• Google Wallet (uses NFC for payments)
• Square Reader and Wallet
• bPay: bPay Uses College Town as Its Test Case for Mobile Wallet
• Starbucks App
• Facebook? Facebook to test mobile payment feature
• QR Codes
• Near Field Commnuication (NFC)
• Bitcoin: The Bitcoin bubble

Consequence of new Payment Systems

• Reduced friction
• More consumer data for merchant
• Comparison shopping, couponing, loyalty cards, geo data
• Complexity for simplicity
• personalization ubiquity; ties everything together, price, location and promotion
• Increased privacy issues

Roadblocks

• Change consumer behavior (inertia) Baby steps (Apple)
• Cost of legacy systems
• Chicken-and-Egg dilemma
• Breadth of competition: telcos, banks, credit card services, tech giants, entrepreneurs (Square), retailers, Point of sales systems
• Innovator (focus and vision) versus incumbent (assets, cash, footprint)
• Standardization of new systems
• Adoption in less developed countries