Just-in-Time Pricing

By Gus Antorcha and Just Schürmann

It’s said that timing is everything, and that rule certainly applies to pricing. An often overlooked factor in driving purchase decisions, timing can be applied to nearly every pricing approach, from discounting to cross-selling, to achieve “just-in-time pricing.” A company in the travel industry, for instance, was able to sell more than 90 percent of its unsold inventory, increasing net income margin by half a percentage point, simply by splitting up the purchase decision over time. The company found that consumers were more likely to purchase an upgrade or an add-on amenity when contacted close to their travel date than when presented with the same offer at the time of the initial purchase. With little investment—just a small change in strategy—the company more than doubled the success of its upselling efforts.

Strategies such as this are especially relevant now, when companies are seeking growth avenues compatible with their customers’ tight wallets. Raising prices across the board often is not a viable option in tough times. Just-in-time pricing can help drive overall profit through improved discounting, cross-selling, upselling, bundling, and unbundling of offerings.