Dynamic pricing strategy

makemytrip.com
Dynamic/time-based pricing
• customers are divided into two or more
groups with separate demand curves, and
different prices are charged to each group.
• It can increase the profit of a firm by
enabling the firm to capture more
consumer surplus.
 Dynamic Pricing
1Competitive Pricing:
Delhi-Mumbai goAir flight on Oct 9th costs Rs.4731 (more
commercial), corresponding Delhi-Guwahati (less commercial)
flight costs Rs.8503

2 Sync Pricing (As per perceived value):

Time differential:
• Ticket prices 14 days before date of departure are cheaper
than prices of those 1 or 2 days before date of departure e.g
base fares for GoAir in the 0700-1200 time slot move up from
Rs.1850 on Oct 9th to Rs 2600 on Oct 1st
• Ticket prices during off hours are less as compared to peak
hour rates e.g JetLite peak hour prices on Oct 16th are
Rs.5089 as compared to non-peak hour prices(Rs. 3386)
3.Promotional Pricing
• Sales
• Special offers
• Final reductions
• Buy one get one free!
• Used to increase sales in the short term, in order
to clear space for new lines, undercut a rival or
clear stock that is no longer in demand.
Dynamic Pricing
Features Challenges Advantages

For service Competitive •prices can move down Peak and off
Marketer Pricing with dynamic pricing Peak hour
(Makemytrip Yatra, Travelocity •Supply Demand Match Volumes high
) Sync Pricing(As •Creating maximum no. then profit more
per perceived of conversions benefit from a
value) •affects supply-chain bigger pool of
price optimization operations, capacity potential buyers
Becomes management, channel
possible and customer
relationships
•Segmentation of
Prices/Customers
For One stop shop Understanding Price buyers benefit
Customer Communication from increased
choices
 Dynamic Pricing Features
AC cab service Insurance Carbon foot print
(assuming a pickup
to Delhi airport)

Cab costs(C)=Rs Insurance Carbon footprint

20/km costs(I)=Rs.111 (FP)=Rs.143
Let distance to
airport be k km Total costs= Total price=P+FP
Costs=P+C Rs.(4631+111)= =Rs(4631+143)
=Rs(4631+20k) Rs.4742 =Rs. 4774