"Subscribing" to product purchases - pricing opportunities? | Stratinis Pricing Software

07/07/2013

"Subscribing" to product purchases - pricing opportunities?

I have recently signed up for a service from Amazon UK, where I subscribe to deliveries of Gillette razor blades. Unless skipped or cancelled I receive every two months a pack of 8 blades. There is supposedly a saving for the consumer (me) when subscribing as Amazon can plan purchased better, or something along those lines. The price was £17.95 for a pack of 8 blades when I signed up in May, which IS a good price in the UK market (that prices on Gillette blades vary considerably across Europe is a different story).

Now I just received an email that my next subscriber delivery is about to dispatch, but at a "new price". In all fairness, Amazon is not trying to hide the price increase, but the new price (with a discount for being a "subscriber") is £21.64, that is an increase of 21% after discounts! I cannot help wondering, if either Amazon or Gillette are trying to exploit that once they have subscribers signed up, we become less price sensitive? It probably is true: why bother checking the new price or go back to the inconvenience of getting the razor blades (or other goods) elsewhere, when the next shipment is coming automatically from Amazon or another retailer. Even if the price has changed a bit...

Subscription systems for product purchases seem to popping up in different places these days. I have seen it with Amazon but also retailers and even at some services provides such as recruitment services. The supply chain team is probably excited and so could we pricing managers be. But we need to look out for getting too much out of the pricing opportunities and thus alienating the customer in the programme's infancy.

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