Dynamic Pricing Case Studies

Educational Retailer

Company	A UK retailer of educational supplies.
Product	A specialist electronic calculator.
Value Added	Extended warranty, exchange for new, choice of delivery modes.
Target Market	Student accountants undertaking professional study.
Geographic Locations	100,000 students worldwide including 10,000-15,000 in Europe.
Distribution	Direct, mostly via the Internet.
Promotion	Links from the web site of the professional body. List of official suppliers distributed by the professional body.
Competition	5 other official suppliers around the world.
Initial Price	£47.50 set by reference to cost price and the selling price of the other suppliers. This represented a 15% profit margin.
Initial Outcome	High sales with the potential to exhaust stock before they could be replenished. This would have negatively impacted the contractural service level agreement.
Action	Incremented price in £1.00 steps and monitored impact on sales.
Outcome	No impact until the priced reached £55.00 when sales significantly slowed.
Final Action	Set price at £53.00.
Business Value	Sold 5,000 orders at higher price, worth £27,500 in additional profit.
Other Comments	Buyers were first time customers and there was no specific intention to develop a long term relationship. Sales were made over a relatively short time and speed of delivery and after sales service was probably more important than price. The product was not generally available in the market place.
Source	Telephone interview with the Company.