Iterative Path

On Pricing Low

Rags Srinivasan — Sun, 27 May 2012 14:29:13 +0000

Here is a comment on an old article of mine titled, Enough with the marginal cost argument, Rags, there may be a pony in here somewhere, but I’m having trouble finding it. In competitive markets with many substitutes, marginal cost is a the key to pricing. You may not like it, but it’s true. The … Continue reading →

It is likely better to speak in absolutes

Rags Srinivasan — Wed, 23 May 2012 13:07:07 +0000

You read only interesting findings because only those get published, get written about and popularized in social media. Experiments that find no statistically significant difference don’t leave the filing cabinets of researchers because no one wants to read a story where nothing happens. This is such an experiment, where there was not enough evidence to … Continue reading →

Don’t touch that pricing dial

Rags Srinivasan — Mon, 21 May 2012 00:58:01 +0000

Until a few months ago this is how JCPenney’s prices looked like. I show actual numbers in this chart for one product but you can take that model and apply to all their SKUs. Lots of red bars. Starting with a high price with many discounts applied to it, leading to a low pocket price. … Continue reading →

Deliberate Pricing or Math Ignorance?

Rags Srinivasan — Sat, 19 May 2012 18:54:30 +0000

What do you think? Is this a case of Asymmetrically Dominated Option (Decoy pricing) to make it attractive to buy the middle option? Effective non-linear pricing to capture more value from those who want 3 baskets (like what we saw with hair-braiding case here) Deliberate mis-pricing to capitalize on those customers not so good at … Continue reading →

What Percentage of US Teachers are Millionaires?

Rags Srinivasan — Tue, 15 May 2012 01:05:33 +0000

14% of millionaires are teachers – does that mean becoming a teacher is a way to riches? on.barrons.com/K9BiWL P(T | M) = 0.14, P(M | T)=?— Rags Srinivasan (@rags) May 14, 2012 I saw a Statistic that said 14% of the millionaires in US are teachers, second only to managers and ahead of lawyers and … Continue reading →

In the Spirit of Price Unbundling

Rags Srinivasan — Sun, 13 May 2012 15:15:27 +0000

Want a boarding pass? That will be $5, please. Thirsty? Water is $3, though Spirit Airlines say it is safe to drink from the bathroom tap. Carry-on bag in the overhead bin? $30-$45 (soon to be $100). – Spirit Rewrites Airline Economic Model, WSJ Five years ago I was working on Unbundled Pricing. At that … Continue reading →

Can you afford to set your pricing wrong?

Rags Srinivasan — Mon, 07 May 2012 13:29:41 +0000

“My only regret was how we introduced pricing in the beginning, because how did we introduce pricing? Thirty dollars and you get all you can eat,” This is what ATT wireless CEO Mr. Randall Stephenson said about their iPhone history. It is likely that the price and the unlimited data plan made sense in 2007 … Continue reading →

Please don’t embarrass us by having a business model for your startup – VCs

Rags Srinivasan — Tue, 01 May 2012 13:44:12 +0000

When I wrote the valuation model for Pinterest, many people wrote to me to point out that Pinterest stopped using SkimLinks and hence stopped making any revenue. Making revenue it turns out is not good for your startup (don’t quote this line out of context). How do you value an investment? Any investment, be it … Continue reading →