Tag Archives: Price

Updates from Chicago Booth

Are you ready for personalized pricing?
By Brian Wallheimer – The introduction of the price tag was a big step forward for American retailing, and you can thank John Wanamaker. In the 1870s, Wanamaker purchased a former Philadelphia railroad depot and expanded his men’s clothing business to include women’s clothing and dry goods.

Along with Macy’s in New York and other department stores popping up in major cities, Wanamaker’s Grand Depot revolutionized how people shopped, primarily by placing many different items under one roof. But it went a step further and changed not only where people purchased items but how they paid. It adopted the price tag.

Until that point, pricing had involved a dance between clerk and customer. When a customer picked up a shirt and admired it, a clerk had to know how much the product cost the store, the overhead associated with storing it, competitors’ prices, and more. Meanwhile, he had to figure out, was the customer in a hurry and willing to pay more, or had he come prepared to negotiate for a steeper discount?

With more than 100 product counters to staff, Wanamaker didn’t have time to teach employees the fine art of haggling. Instead, he affixed a note to every item in the store with the amount a customer was expected to pay. more>

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Connecting People to Prosperity in the Exponential Age

By Vanessa Bates Ramirez – “Our assumptions about how economies function no longer seem to hold true entirely because of exponential technology.”

This claim came from entrepreneur and Singularity University faculty member, Amin Toufani.

In what he calls exponential economics or “exonomics,” Toufani breaks the tech-driven changes happening in the modern economy into seven pillars: people, property, production, price, power, policy, and prosperity.

Toufani pointed out that exonomics’ ultimate goal is to connect people and prosperity.

“Technology is empowering all of us, and people seem to be doing what companies used to do and companies seem to be doing what governments used to do,” Toufani said.

The democratizing effect of information technology is enabling small teams to have an outsized impact. He showed a graph of collaboration app Slack’s user growth, and it’s practically a vertical line. A few years old, Slack reaches millions of users, many of whom pay for the service, and was recently valued upwards of $9 billion.

The kicker? Slack was created by a team of 12 software developers. And it’s far from the only such example. more> https://goo.gl/wpBRPz

Updates from CHICAGO BOOTH

Is the food really better at expensive restaurants?
By Alice G. Walton – People often assume that there’s a straightforward relationship between price and quality—a low price indicates something is of low quality; a high price indicates it’s high quality.

However, this relationship is more complicated and can vary hugely depending on the price of the product at issue.

Quality can also vary more at one end of the price spectrum than at the other—the phenomenon of heteroscedasticity.

Laundry detergent is usually of low quality at low prices, but of unpredictable quality at higher prices.

The opposite is true of wine, for which higher prices predict better quality, but the quality is less predictable at lower prices. more> http://tinyurl.com/kfo4pe8

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