New players with disruptive technologies are gaining traction. As the pace of commercial decision-making gathers speed, dynamic pricing is rapidly becoming the norm to compete. So, the race is on for freight and passenger operators to optimize pricing models to drive profits.

Dynamic pricing applied

Dynamic pricing is about optimizing a key business outcome—typically revenue-related, but it could also be focused on customer service and satisfaction, capacity control, or other factors. Just as each company has its own competitive strategy, each has its own unique pricing strategy. The drivers used to determine price will vary for each company—even within the same sector—and be applied to differing degrees depending on the specific needs of the business.

As transport reinvents, disruptive digital tech—the Internet of Things (IoT), smart products, real-time intelligence and connectivity plus artificial intelligence and data analytics—will form the backbone of rail and transit travel.

Reinventing rail pricing strategies:

  • Improve customer segmentation.
  • Adopt sophisticated forecasting.
  • Reverse spiral-down discounting.
  • Accelerate digitization.
  • Embrace personalization.
While there are specific challenges, companies in both the passenger and freight sectors share multiple opportunities to accelerate the shift to modern pricing capabilities.

The shift to modern dynamic pricing

The shift to today’s customer-focused pricing is part of a transformation approach designed to systematically manage massive amounts of complex, real-time data to enable accurate forecasting, improved recommendations and dynamic capabilities, optimized to drive up profits.

Real-time data

Take advantage of complex and real-time data to enhance forecasting.

Machine learning and AI

Leverage machine learning and AI to instill a data-driven, analytics-based approach to decision making.

Align pricing with brand strategy

Consciously align pricing with brand strategy and all marketing decisions.

Analytics

Extend analytics to support the entire organization.

What’s the next step?

Focus on customer centricity.

  • Understand the customer rather than the transaction.
  • Align opportunities to the end-to-end customer experience.

Create an enterprise approach

  • Do not silo pricing and revenue strategies—create holistic, coordinated business processes.
  • Integrate pricing and revenue strategies across all customer segments.

Drive value with elegant simplicity

  • Embed new capabilities to deploy advanced pricing systems.
  • Constantly balance the desirable and do-able to maximize impact.

About the Authors

Alden Cuddihey

Managing Director – Public Transportation


Gregory Pesik

Managing Director – Applied Intelligence


Michael English

Managing Director – Rail and Transit NA


Pierre-Olivier Desmurs

Managing Director – Rail and Transit EALA

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