Vendavo Price Chat

Where some of the best minds in pricing meet to discuss current pricing trends, their takes on relevant news, tips and tricks for maximizing your pricing efforts, and so much more


Budget Airlines

This week Paul Sansom and Dan Cakora discuss the possible end of budget air travel in America. It’s been a bumpy couple of years for low-cost carriers. Join us on the Internet’s ONLY source for Pricing News!

Welcome to Price Chat

Welcome to Price Chat with Dan and Paul. Join us as we periodically discuss topical news stories, how they relate to the pricing world, and what we would do if we were in charge. During each episode, we avoid doing our day jobs and review interesting challenges such as Red Lobster’s Endless Shrimp debacle and how we would solve it.

So, how can we build a better promotional strategy? You can certainly incentivize new behavior bring in different customers, but you need to understand the cost to serve and the relationship to your volume. Examine the behavior of your customers before they’re buying, incentivize higher margin purchases with cross selling, and cover your costs.
We really have to understand where we can make the most margin and how we can do it the most efficiently.
“Platforms are being besieged on all sides by high content costs, increasing churn rates, and, up until recently, a lack of ad revenue to support their platform. So, they’ve lost 25 to 30 percent of revenue every year. Investors don’t like losing revenue, so they have put pressure on these companies to close the profitability gap by raising prices.
How do you think companies can close this profitability gap? The one tried and true method is of course market consolidation. It’s reducing the number of options and potential competitors. You could also call this the Wild West phase, as it includes tons of options like including direct competitors and niche players.
Even though people are canceling in droves, almost 39 percent of those customers return to the service and subscribe again within 11 months. So this could signify seasonality, such as customers subscribing for college football season or the new edition of Love is Blind. Therefore, companies could incentivize longer durations of 12 or 24 months with lower prices.