#UBER DYNAMIC PRICING MANUAL#

Dynamic pricing enables suppliers to be more flexible and adjusts prices to be more personalized. Price may even change from customer to customer based on their purchase habits. What is Dynamic Pricing?ĭynamic pricing strategies, also called surge pricing, demand pricing, real-time pricing or algorithmic pricing is where the price is flexible based on demand, supply, competition price, subsidiary product prices. Price discrimination in the digital world is commonly called dynamic pricing. This started a golden age for price discrimination where companies can offer customers prices based on their exact willingness to pay. Each customer gets personalized product suggestions and personalized prices. However, e-commerce enabled companies like Amazon to develop digital personalized stores for each customer. Time-specific products such as transportation or hospitality products also have the advantage of changing prices based on time of purchase. Student fares are a common mechanism to set cheaper prices to customers who have less willingness to pay. In the pre-internet days, companies’ capabilities for setting different prices for different customers were limited. Price discrimination is a microeconomic pricing strategy where identical or largely similar goods or services are transacted at different prices by the same provider in different markets. What if you can cover all the price segments and respond faster to demand fluctuations in the market? This is possible with price discrimination. Even if you have a high demand for penetration pricing, the price will remain low. At premium price level, demand would be low. Profit maximization is not always possible with both strategies.

Initially, penetration pricing may cause revenue loss but the main goal of this strategy is market penetration. Companies use this pricing strategy to raise brand awareness and increase customer loyalty.

Penetration Pricing: Penetration pricing is basically setting the price relatively lower than the market competition.

Premium pricing effectively works when the product has a unique feature that differentiates it from similar products in the market and has a competitive advantage. The key factor for the success of this strategy is differentiation.

Premium Pricing: Premium pricing is where companies set the price higher than average competitive price.

Without sophisticated algorithms, two pricing strategies were common:

#UBER DYNAMIC PRICING MANUAL#

Sellers used to set the price for a product or service based on a manual analysis of the cost, demand, supply or competition.

Any corporate leader needs to know about effective dynamic pricing, and we answer all questions in this article: What are traditional approaches to pricing? Hence, they introduce one of the most complicated problems for the other teams to interpret and reuse the metrics, which ends with teams creating their own.Dynamic pricing allows large and small companies to improve their margins quickly. However, due to the nature of distinct storage types, it is non-trivial to cross-validate the consistency of two definitions regarding the business logic, dimensions, and more. Both are all valid from each team’s perspective. For example, an Operations team defines the “ completed trips ” metric as a Presto/Hive SQL in the last 18 months for daily dashboarding, while the Pricing Engineering team creates its own completed trips metric from a Cassandra table for real time services. To accommodate the needs of freshness, latency, and time span from diversified metric consumers, the same source data is usually available in multiple storages. Obfuscating metric instances per source storage type.

From our observations, there can be 10X or 100X instances spinned off for a popular metric and even worse, some of their names are misleading and do not capture the complete details of the dimensions and filters.

Overwhelming metric instances per combination of slice/dice dimension and value filter, like “Completed Trips In New York,” “Completed Trips In San Francisco,” “Completed Trips Daily In San Francisco,” etc.

Uber dynamic pricing