In the middle of the merging rumor of GoJek and Grab, I want to come back to an old article related to their business model: progrssive pricing by BCG

Why Progressive Pricing 

Is Becoming a Competitive Necessity

Progressive pricing is a competitive necessity because of its added values to both customers and firms. Leading tech companies should carefully implement four imperatives to fuel this inevitable technology growth.

With progressive pricing, which was already embedded in the sharing economy, firms do differentiate their products and services by individual customers and differentiate their prices accordingly. The system comes from the idea that optimizing continuum of prices is better than optimizing a number of price points. From that, it can create a win-win opportunity for both companies (more innovation and more profitability) and customer (expanding-value surplus).

Four differences between progressive pricing and traditional fixed-price approach

• Market expansion. Every customer has an opportunity to use the product or service, with price and value carefully and consciously adjusted to the customer’s current situation
• More consumer Surplus. Customers as a whole retain more value (reduced waiting time)
• More Profit. The firm earns more money
• A renewed sense of fairness. customers pay a price proportional to the value they receive

Two trends are changing day-to-day reality

• The independence of innovation from costly physical product improvements. 
• The omnipresence of mobile technology enables companies and customers to forgo unprecedented links with each other.

Four imperatives that firms need to execute to read profitabilty

• Invest to innovate with data, software and artificial intelligence. 
• Reinforce the bond of trust with their customer by providing added-value incremental
• Make customer values more explicit, transparent and personal. 
• Redefine and communicate the fair principles behind the algorithms to emphasize that values are shared among customers rather than extracted from them.