Program Announcement - 22nd Annual Fall Pricing Workshops & Conference

PPS is proud to announce the official program for the 22nd Annual Fall Pricing Workshops & Conference to be held in Las Vegas from October 25th to 28th.

Please click on this image and start planning your Workshop & Tracks selections. Complete your registration and travel arrangements and be ready to attend the biggest and most prestigious pricing event in the World.



We have assembled a powerful and compelling program for you.

• Four days packed with the brightest minds in pricing.
• Two 2-Day Workshops
• Four 1-Day Workshops
• Full Day Pricing for Executives Summit
• Five World-Class Keynote Sessions
• 18 Different Sessions divided in three tracks for you to choose.

Act Now & Save Money!

Early Bird Registration is OPEN NOW!

We look forward to seeing you in Las Vegas!

More on Mobile Phone Pricing Wars

In follow up to my post last week: "Mobile Pricing Wars and Gas Pricing Study" - Demand is continuing to decrease in the consumer electronics markets as consumers continue to cut extra spending, and cell phone companies are feeling the heat more than most. Recent coverage of this industry is demonstrating what a competitive pricing market this is becoming.

One recent article reads:

Nokia and its main cell phone rivals have started to slash prices as demand falls and retailers cut inventories after lackluster holiday sales.

Consumer electronics demand slumped in the key Christmas season, and handset vendors Motorola and Sony Ericsson have reported grim sales figures.

For 2009, analysts have cut their market estimates with the average forecast now for a 7.9 percent fall in volumes.

Falling demand at a time when retailers and operators are trying to cut inventories has lead to increasingly aggressive pricing. While vendors often cut prices in January, some actions this year have been more aggressive than usual.

"Our researchers have seen significant price cuts in Europe by the major handset vendors as 2009 begins," said Tom Byrd, who leads device-pricing research at CCS Insight.

"This reflects the highly competitive pricing environment we have been predicting for this year," he said.

Read the full article: "Pricing fears rise in shrinking cell phone market". And it isn't just the phone sales that are suffering. Consumers are shrinking the amount of added services and functionality they want to pay for on their phones. (Thus the all you can use bundles we covered in a recent post). Even IPhone App developers are introducing new pricing models to encourage app sales, including a "pay-what-you-want" pricing model.

"iPhone application firm App Cubby—maker of Trip Cubby, Gas Cubby, and Health Cubby—has announced that it is attempting a new pricing strategy in hopes of improving App Store sales. The company, which has been open with its numbers as well as vocally against the $0.99 app store paradigm, has decided to start pricing their applications at $0.99 and to encourage users who are happy with their applications to donate more if they feel the applications are worth it.

"The tactic, which was brought to our attention by iLounge, is of course a calculated move by the company. While it will take five to 10 times as many purchases to earn what the company was previously earning, the developers are no doubt banking on free publicity they will receive from this move. There's also the addition of the impulse-buying costumer not necessarily found at the $5 and $10 price points, and the occasional generous customer who donates lots of moolah.

"This is the first instance I have seen where a company both charges for its product and asks for donations. Programmers of free apps have done the latter for some time, but variable pricing is something that is becoming more popular in the digital lifestyle. The band Radiohead is, of course, the most prominent example with its "pay what you see fit" album Rainbows in 2007. Since then, Nine Inch Nails' Trent Reznor has also dabbled with the concept."

Read the full article: "iPhone dev lowers prices, tries pay-what-you-want model". On another note - and going back to the sports franchise demand pricing trends we have been covering - on franchise is actually going against the flow and increasing ticket and parking pass pricing in 2009. The Houston Texans are so confident in their product and the experience that they provide, that they insist on raising prices to maintain the level of profits they need to preserve the quality of their product:

"The Texans continue to be the hottest sports ticket in the city, with seven consecutive sellout seasons since the team began NFL play in 2002. Since 2006, the league average ticket price has risen by more than 6 percent annually, while Texans tickets have increased an average of 4.25 percent.

"We are sensitive to the economic challenges that our fans are facing,” said Jamey Rootes, Texans president. "We have worked diligently to implement a pricing structure for 2009 which keeps our prices in the lower half of the NFL but is adequate to continue our progress both on the field and off. Fielding a competitive team and delivering a world-class experience for our fans demands that our revenues keep pace with our costs."

Read the full story here: "Houston Texans to raise ticket prices". How will consumers react? We will see. Warmly, EM

Demand Pricing Update - Apple and ITunes

The variable and demand pricing strategies continue: Apple recently announced that it would raise the price of "hit" songs on ITunes - those in high demand - and lower prices for the extensive library of tracks that garner less volume and customer attention:

From the LA Times: "Apple raises prices as music sales slide":

"As for variable pricing, I've weighed in before on the need for record companies to try to make more money by charging less for music. The deal with Apple is a half-step in that direction. But it's also clearly an effort to extract more dollars from those who are already buying tracks, rather than grappling with the bigger problem -- the steady reduction in spending on music."

And from CNNMoney.com: "Apple Changes ITunes Pricing":

"Schiller said iTunes will now offer three price points for songs: 69 cents, 99 cents and $1.29. It will also offer all of the 10 million songs in its library without copy protection, and will allow iPhone users to download songs through 3G wireless networks. In a press release accompanying the announcement, Apple said the pricing of a song will be based on what music labels charge. The labels that have agreed to the pricing include the four biggest - Universal Music Group, Sony BMG, Warner Music Group and EMI. Many in the industry has been critical of Apple's 99-cent pricing, with some executives saying that it cut into profits on hit songs that could sell at a higher price."

Again, great resources are available in the PPS archives, including "Driving Demand Profitability with Pricing."

In a related story, rapidly increasing competition is forcing Ticketmaster to reduce their prices as well: "Ticketmaster Chief Moriarty Sees Lower Ticket Prices."

Pricing is getting a lot of major media attention as many companies are again focusing on foundational, critical business strategies. This is a great time for expert pricers to demonstrate their skills and expertise. Warmly, EM

Airline and Performing Arts Pursue Demand Pricing

As promised, more updates on new airline pricing models: "Frontier debuts new a la carte pricing model":

(Dec 22) "Late last week, Frontier Airlines became the first U.S. airline to unveil a new “menu-pricing” fare structure, in which passengers can choose from among three different pricing levels: Classic Plus, Classic, and Economy. Each ticket level comes with a certain number of amenities—the more you pay, the better services you get."

"...Air Canada has had a similar price structure for years, and other U.S. airlines are rumored to be thinking about moving in this direction, including American Airlines. For Air Canada, menu pricing has not only proven to be a money-maker, it’s also relatively popular among passengers. If passengers are willing to forgo all the extras, they can actually save money on their flight."

Other industries are starting to follow suit, believing this new pricing structure to be a sound profit model. I pointed out the stirring of this pricing in the NFL a few weeks ago. Some college teams seem to be dipping their toes in to test the waters, as well as the performing arts industry: "Performing arts charging more for premium seats":

"Just like airlines, many performing arts venues are beginning to charge more for ticket-holders to stretch out their legs."

"..."Demand pricing" is taking hold, said Alice Kornhauser, marketing director of the Portland Symphony Orchestra. "If people are willing to pay more for an aisle seat, then it's pretty irresponsible from a business standpoint not to charge," Kornhauser said."

"It should not be a surprise that arts organizations use sound business principles to have a more substantial financial foundation," Steller said. After all, other businesses including airlines and hotels have based their pricing on demand for years, she said."

Demand pricing is a very profitable strategy in some industries, although as I pointed out in a recent post, price increases can backfire if not thought through completely. We we keep a close eye on these industries as 2009 progresses, as this trend seems to be spreading quickly.

One of our PPS archive articles, "Pricing In Highly Competitive Markets", has this to say about these types of pricing strategies:

"Unbundle Everything You Can - In a price competitive market place it is important not to offer anything that customers don't value. One way of doing so is by making sure that every element of the product or service is sold individually. This approach lets customers choose which features and benefits they want to pay for and which ones they don't need.

"You gain because you no longer have to provide those features and benefits where they are not warranted and get revenue when they are. Remember - just because your competitor offers these features or benefits doesn't mean they will get the deal. If the customer is truly a price buyer, they will give the business to the company with the lowest price, provided that the minimum standards for quality and service are met."

Even Blockbuster, who has been fighting an uphill battle ever since the on-demand services and tiered pricing strategies introduced by Netflix ripped the carpet out from under them, have moved towards a tiered pricing structure:

"Blockbuster tests new tiered pricing":

"Blockbuster is testing a pricing scheme in the Metroplex that lowers prices for older movies but brings back per-day late charges.

"Under Blockbuster’s "Any Way You Want It" program introduced this month, customers pay a daily or weekly rate to rent DVDs and Blu-ray discs. There’s a charge for each additional day they keep the item without returning it, and there is no grace period before those charges kick in.

"The Dallas-based company hopes that the new pricing structure will make the rental pricing easier to understand and help keep popular movies and new releases available for renters."

More to come - EM