A very interesting article from Joe McKendrick, in what is called the "Business Brains" column of SmartPlanet. We've all been to amusement parks such as Disney and Universal (and now a while host of others) where at the end of the roller coaster or other thrill ride (and even some not-so-thrilling rides), you are presented with the option of buying photo products as the automatic camera snaps an "action shot" of you and your family. It's not exactly a "value proposition" for Moms and Dads, as prices tend to be - shall we say - on the high side. Now, three researchers from the University of California-San Diego have published the findings of a novel study they conducted at an unnamed amusement park in their area. Rather than charging stock prices, the amusement park allowed customers to set their own price on what they would be willing to pay for their photos. Here is a synopsis of what they found:
“The authors set up their pricing experiment at the exit of a roller-coaster ride at a large amusement park. Riders were offered a photograph of themselves, snapped mid-coast. The usual price was $12.95, but on one day riders were told they could pay what they wished, including taking the photo for free…. Allowing customers to set the price dramatically increased the percentage of buyers—from less than 1% to 8%. Even accounting for those who took a free photo, the amusement park collected more revenue on the pay-what-you-want day than when selling for the usual fixed price....when customers were informed that half the money they paid would go to a charity, revenues tripled.”
You can read the complete article below:
Experiment: does it pay to let customers set their own prices? - SmartPlanet
So, allowing buyers to have a say on pricing actually works - even in the world of make believe!
David Wyld, Professor of Management at Southeastern Louisiana University and Director of the Reverse Auction Research Center (http://www.reverseauctionresearch.com/)
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