Smart Pricing: How Google, Priceline, and Leading Businesses Use Pricing Innovation for Profitability

9. Pay If It Works

“Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.”John Wanamaker, department store owner

In the century since Philadelphia retail pioneer John Wanamaker made his famous quip about wasted advertising money, a lot has changed in the world. But one thing has remained the same: Vendors still spend billions on advertising and other services and products without knowing for sure whether they have wasted their money until after they have spent it—an incredible fact that makes many transactions not all that different from the story of Jack trading the cow for some magic beans.

This is changing now, however, partly because of advances in technology and partly because of an innovative new pricing ...