Name Your Own Price (NYOP) is a system where buyers are able to communicate the price they are willing to pay for a specific service or good, and the transaction only occurs if the seller accepts this price (Fay, 2004). This type of pricing has become popular because of the website Priceline.com, where the buyer is able to name his own price for hotels, car rental services and flights. The disadvantage for the buyer is that he does not know who the supplier will be, or in case of a flight, he is unaware of the schedule until after he makes a non-refundable purchase. This manner of pricing makes it possible to distinguish price-sensitive from less price-sensitive travelers.
Even though this was Priceline’s trademark pricing strategy, on September 1, Priceline,com eliminated the pricing strategy Name Your Own Price for flights. Priceline will still perform the flights that were booked before this elimination and they continue to use NYOP for hotels and car rentals. For the flights, it is able to look at specific deals instead of NYOP, which are called Express Deals.
Why did they stop offering this service? Your mobile phone can be blamed. According to the spokesperson of Priceline, Lemarchand-Wood, there has been a ‘dramatic evolution in both technology and consumer behaviour when it comes to booking travel’ (Schaal, 2016). More people are booking flights and hotels via their mobile phone, and the NYOP was difficult to book on such a small screen. Therefore, they now focus on Express Deals, which are easier to book, also on the mobile application. The removal of NYOP is part of their new strategy which will ‘help consumers connect with deals faster and more easily than before’, according to Lemarchand-Wood (Shaal, 2016).
This transition to mobile booking might become the end of NYOP, however, it can just as well be an opportunity to make the booking process easier for mobile applications.
References:
Fay, S. (2004). Partial-Repeat-Bidding in the Name-Your-Own-Price Channel. Marketing Science, 23(3), pp. 407-418. <https://warrington.ufl.edu/centers/retailcenter/docs/papers/Fay2004.pdf>
Schaal, D. (2016, September 02). Priceline Kills Name Your Own Price for Flights. Retrieved 24 September 2016, from <https://skift.com/2016/09/02/priceline-kills-name-your-own-price-for-flights/>
