Yesterday, our client Digonex, a provider of real-time, automated, dynamic pricing technology was featured on National Public Radio’s (NPR) Morning Edition in a story on the impact dynamic pricing technology can have on the digital music industry. The piece coincides Digonex’s partnership announcement with The Orchard, an entertainment solutions provider focused on building and monetizing audiences for its clients.
Reporter Laura Sydell reports, “What Digonex is doing is what economists like University of Southern California professor Joseph Nunes call “dynamic pricing. Nunes says economists and retailers have been trying to nail this for years.” “We know on hot days people drink more, so if a supermarket could rush out and change the price of their soda very quickly, they would,” says Nunes.”
Unlike variable pricing models, meaning there are more than one set of prices available for a service or product which digital music retailers such as Apple are using, dynamic pricing models allow pricing to adjust up or down based upon consumer demand. This enables music labels, retailers and other organizations to offer prices that are market-driven, and consumer and seller friendly. Digonex believes that dynamic pricing models will reduce the cost of items such as albums and singles which will increase the value for consumers, and empower them to explore and discover new products they might not have otherwise.
While sophisticated pricing models are still a relatively new concept to the market, the impact that dynamic pricing can have on selling and purchasing behaviors is significant and can provide a win-win solution for retailers and consumers. Dynamic pricing is already becoming prevalent in many industries including e-commerce, ticketing, and digital media.