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ONLINE SEARCHER: Information Discovery, Technology, Strategies

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Pricing Dynamics: Itís a Zoo Out There
Volume 40, Number 1 - January/February 2016

In June 2014, the Indianapolis Zoo became the first zoo in the U.S. to institute dynamic pricing. The cost to visit the orangutan center, view the lion cubs, and avoid an escaping cheetah (yes, we really had Pounce the cheetah on the loose briefly in September 2015) now varies by time and whether you buy online or in person. Cold weekdays are priced lower than warm weekends.

You’re probably familiar with the dynamic pricing methodologies of airlines and hotels. Just try to get a cheap airfare over a major holiday or an inexpensive hotel room in a city where there’s a major conference. Retailers have flirted with dynamic pricing for several years, particularly online, where they can alter prices based on popularity. More recently, electronic pricing signs in stores can also be changed quickly. I’m not sure how I would react if I looked at a sign that said a pair of socks was $3 and as soon as I picked up the socks, the sign moved up to $5. I’d probably put the socks back. But if it was $3 on Monday and $5 on Tuesday, would I still buy them?

How does dynamic pricing relate to information products? To a limited extent, librarians buying information have always participated in variations on dynamic pricing. We have tiered pricing based on size of institution or number of users. Librarians negotiate pricing based on a number of supply and demand factors. What we don’t have is dynamic pricing that varies by popularity, time of day, or peaks in usage. Pricing policies of information suppliers alter our behavior. Dynamic pricing must still fit within our budgets. We look at value, particularly in terms of content, and usage to determine fair pricing.

Pearson discovered this when it initiated a steep rise in prices for ebooks to U.K. academic libraries this year. It has backed down somewhat but not, in the opinion of U.K. information professionals, enough. Some think Pearson wanted to shift the payment from libraries to academic departments. Computing comparable usage statistics is a tricky area for bibliographic database aggregators. To keep libraries subscribing to these products, vendors must show that they’re being used. But methodologies differ. What counts? A search? A modification? A downloaded article or book?

The notion of dynamic pricing as applied to information has not been fully explored. It might hold promise, but it has its perils as well. Information companies operate on a global scale. It’s difficult to determine peak times when peak time in Australia is non-peak time in the U.S. Would a vendor charge more for a popular article or a “long tail” article? Which side of the supply and demand equation deserves to be rewarded?

Who determines value? In most cases, it’s the end user not the librarian. Would dynamic pricing affect them? Since libraries pay the bills, information appears free to end users. It’s amazing that the information industry, which is more than 40 years old, still struggles to figure out pricing.

Marydee Ojala is Editor-in-Chief of Online Searcher (the successor journal to ONLINE) and writes its business research column ("The Dollar Sign"). She contributes feature articles and news stories to Information TodayEContentComputers in LibrariesIntranetsCyberSkeptic's Guide to the InternetBusiness Information Review, and Information Today's NewsBreaks. A long-time observer of the information industry, she speaks frequently at conferences, such as WebSearch University, Internet Librarian, Online Information (London, UK), Internet Librarian International, and national library meetings outside the U.S. She has adjunct faculty status at the School of Library and Information Science at IUPUI (Indiana University Purdue University Indianapolis). Her professional career began at BankAmerica Corporation, San Francisco, directing a worldwide program of research and information services. She established her independent information research business in 1987. Her undergraduate degree is from Brown University and her MLS was earned at the University of Pittsburgh.


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