Priceline's Pricing Strategy: Name Your Own Price (NYOP) & Beyond

Details

Case Code : CLMM038
Publication date : 2009
Subject : Marketing Management
Industry : Travel/e-commerce
Length : 04 Pages
Price : Rs. 100

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Key words:

Pricing strategy, pricing policy, Name Your Own Price, NYOP, threshold price, demand and supply, business model, Priceline, Travelocity, Orbitz, Travelzoo, Expedia, Travel, services, e-commerce

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1: This caselet is intended for use only in class discussions.
2: More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US $16) per copy.

 

 

 

 

 

Abstract:

In 1998, Priceline had pioneered the revolutionary 'Name Your Own Price' pricing system that was the inverse of the of the customer-retailer relationship. Some analysts had raised concerns that a business model based on the path-breaking NYOP system might not be sustainable. Priceline had since moved beyond the NYOP system by providing customers with the option of choosing from a list of published prices for its travel products and services as well. In a bold move in end2007, the company permanently eliminated all booking fees on published airfares taking the analysts and competitors by surprise.

Issues:   » Analyze the Name Your Own Price (NYOP) pricing system   » Discuss whether a business model based on NYOP system is viable   » Analyze the reasons and implication of Priceline’s pricing policy of not charging booking fees for published fare air tickets Introduction In November 2007, Priceline.com (Priceline) an Internet-based travel service provider which offers services like airline/cruise tickets, hotel bookings, vacation packages, and rental cars at discounted prices, gave a major jolt to its competitors like Expedia.com (Expedia), Orbitz.com (Orbitz), Travelocity.com (Travelocity), and Travelzoo.com by "permanently" eliminating all booking fees on published airfares...

Questions for Discussion:

1. Critically analyze Priceline's Name Your Own Price (NYOP) system. List the pros and cons of this pricing system. Do you think Priceline's business model based on the NYOP system can sustain itself in the long run?

2. Critically analyze Priceline's new pricing strategy in which it had decided to permanently not charge any booking fees for the published fare airline tickets. What kind of ramifications do you think this aggressive pricing strategy could have for Priceline and its competitors?

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