Dynamic Pricing

A proven pricing strategy for increasing your yield.

What is dynamic pricing?

Dynamic pricing is the practice of changing the price of a product based on customer segments or market conditions.

As a product's pricing becomes more personalized, average revenue from new customers increases. Concurrently, total conversions increase because of lowered pricing for appropriate customer segments.

Businesses who apply Modern Pricing's dynamic pricing strategy typically see a 30% increase in overall revenue.

Learn How It Works

How Pricing Expectations Have Changed over Time

1861

Prior to John Wanamaker opening his first department store in Philadelphia, prices were most commonly determined by haggling between buyers and owners. He changed buyer expectations by introducing a fixed price tag attached to each item, indicating the one price that all customers would pay.

1952

William Vickrey, winner of the Nobel Prize for Economics, proposes the first time-of-day-based congestion pricing system—first for the New York City subway and later for toll roads. In response to criticism from elected officials he says, "You're not reducing traffic flow, you're increasing it, because traffic is spread more evenly over time," he has said. "Even some proponents of congestion pricing don't understand that."

1968

Maurice Allais, winner of the Nobel Prize for Economics, publishes an elaboration of Vickrey's earlier congestion pricing ideas, "The Economics of Road User Charges". This study published by the World Bank guides the design of the first road pricing system, the Singapore Area Licensing Scheme, implemented in 1975.

1978

President Jimmy Carter signs the Airline Deregulation Act. This landmark legislation phases out government control over fares and service and in its place market forces step in to determine the price and level of domestic airline service in the US. American Airlines' Robert Crandall is recognized as a pioneer of "yield management", giving rise to its importance in changing pricing across the airline, hotel, shipping, and manufacturing industries in particular.

2000

Amazon customers on the forum DVD Talk discuss they are seeing higher prices, as much as $15 difference, browsing as repeat buyers for top-selling DVDs on Amazon. Customers also reported higher prices while using the Internet Explorer browser versus Netscape. Amazon responds claiming the prices customers saw were assigned randomly as part of an experiment to determine optimal pricing.

2012

Kevin Novak, a Data Scientist at Uber, invents the surge pricing algorithm—a form of dynamic pricing designed to ensure a car is always available, even under the most demanding market conditions. Uber quickly goes on to become one of the most reliable transportation services worldwide.

2019

Modern Pricing releases the first version of its API—making it simple and easy for any company to implement dynamic pricing.