Smart Pricing: How Google, Priceline, and Leading Businesses Use Pricing Innovation for Profitability
by Jagmohan Raju, Z. John Zhang
8. The Snob Premium
“You get what you pay for.”Anonymous
In the 1960s, paying with cards such as Diner’s Club or American Express offered not just convenience, but cachet: Carrying a credit card implied a certain degree of status. Card providers made money mostly from annual fees.
As the market grew, competition drove those fees down. Not only did virtually everyone end up with a credit card, but most consumers carried multiple cards. Between 1997 and 2005 alone, card volume grew by 40%, from 1.80 cards per capita to 2.53. To survive, most card companies changed their business model.1 The smartest saw themselves as providers of a commodity and knew that when trying to sell a commodity, the best strategy is usually to expand the market as wide ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Read now
Unlock full access