# Purple Pricing, game changer or ho hum?



## Str8up8up (Oct 26, 2010)

Anyone heard of the purple pricing method? It's been getting some attention in the sports ticketing world and as i understand it is a method of dynamic pricing where products are put on sale at what is calculated to be the highest price someone will pay and then they steadily drop in price over the period of time until they hit a floor and the numbers work out where the people who bought in the beginning for a higher price receive a rebate to balance it out.

Also called a dutch auction apparently. Anyone heard of it? thoughts? think it could be used for online shirt sales?


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## selanac (Jan 8, 2007)

Isn't that just Haggling?


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## 20vK (Jul 9, 2011)

Sounds like traditional product lifecycle pricing, with the exception of the refund bit.

Price high initially, to hit the early adopters who are less price sensitive and try to recoupe initial R&D and marketing costs, then reduce to target the wider market, then drop to mop up the rest and hit those who are really price sensitive.

What happens with purple if not many tickets sell? - do the early adopters still get a discount? Sound like those online shopping channels where if they sell all their stock, people pay the price the sellers originally wanted anyway!

I guess it is a reassuring way of buying a product, knowing that you will get a refund if more sell...... But more relevant for a product with a limited lifespan. Something where if people don't buy, then you make big losses. A t-shirt design can stay the same for a year and it will probably retain the same or similar "value", unlike a sports event where there is certainly an expiry date. 

You could use it for a limited offer - say you promote a shirt design and the deadline is when you go to press. After that, no more shirts of that design will be printed


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## AtkinsonConsult (May 2, 2011)

Str8:

Never heard of purple pricing before. Googled it and found this interesting article.

http://www.chicagobusiness.com/arti...pricing-will-do-to-northwestern-ticket-prices

How it would work for t-shirts is another matter. Want to bet your business on this iffy theory? Might be a good idea for Orbitz or Priceline, but for how t-shirts are sold it just doesn't have the same cache as an airplane or basektball game ticket. There's no real fear that you will miss out, and if you do - eh, I'll shop for another shirt.

-M


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## AtkinsonConsult (May 2, 2011)

Str8:

Never heard of purple pricing before. Googled it and found this interesting article.

http://www.chicagobusiness.com/arti...pricing-will-do-to-northwestern-ticket-prices

How it would work for t-shirts is another matter. Want to bet your business on this iffy theory? Might be a good idea for Orbitz or Priceline, but for how t-shirts are sold it just doesn't have the same cache as an airplane or basektball game ticket. There's no real fear that you will miss out, and if you do - eh, I'll shop for another shirt.

-M


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## beanie357 (Mar 27, 2011)

Iffy for tees.
Rely on killer art and pro technical execution to set a price point.


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## Redneb (Mar 6, 2013)

Haggling????


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## MadeDesigns (Feb 19, 2013)

20vK said:


> Sounds like traditional product lifecycle pricing, with the exception of the refund bit.
> 
> .....


Doing this with large quantity and sell last pieces for scraps just to get floor space for new product.


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## Printavo (Oct 7, 2007)

Yeah, seems like the same thing airlines do. Maximize revenue by covering all pricing segments.


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## Str8up8up (Oct 26, 2010)

Apologies for the extremely delayed response here. Thank you to everyone who is participating in the conversation.

The reason I found this pricing method interesting is mainly because of what I will call the Tee Fury phenomenon. 

A lot of people haven't even heard of them but they have been quietly killing it for years. Looking at the numbers posted on their site it's easy to calculate that they are selling thousands of shirts per day and generating millions of dollars in revenue. And, they do little to no traditional marketing or promotion.

They don't use purple pricing but it's related because they are selling limited edition products at the low end of the price spectrum and generating a lot of revenue. 

And a significant number of designs from TeeFury can be found on Red Bubble, Threadless, DesignByHumans and other sites for higher prices which kind of contradicts the whole here today gone tomorrow limited edition aspect of the value proposition from the design point of view.

There is a grand unifying theory here just not sure what it is yet...


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## Str8up8up (Oct 26, 2010)

I don't think I would want to bet a business on this yet but I think there is definitely knowledge to be gleaned from the approach.


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## Str8up8up (Oct 26, 2010)

selanac said:


> Isn't that just Haggling?


[email protected],

I wouldn't say it's haggling because when I think of haggling I think of two individuals negotiating directly with one another over a price.

I suppose if you thought of the collective market as one of those people and the party controlling the prices being another then yes it could be a form of haggling.


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## wallace (Feb 5, 2013)

Seems like this benefits more the buyer than the seller. If you are giving back any premium paid by the first buyers, that is poor price discrimination. Airlines have it right - those who are willing to pay more, do. Those who aren't, don't. Everyone pays the amount they are willing to pay.


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## Cyberdon (Jan 31, 2010)

I'd like to know how you determined that they are selling thousands and making millions from their website numbers???

Don


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## selanac (Jan 8, 2007)

Very interesting, but some customers get upset when we play with prices like that.


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## Str8up8up (Oct 26, 2010)

Cyberdon said:


> I'd like to know how you determined that they are selling thousands and making millions from their website numbers???
> Don



It's all on their site

"we pay $1 per shirt sold"

You can see on this page for instance that the artist WinterArtwork has earned $69,872 on 29 designs


$69,872 / 29 = earning per shirt

Winter Artwork's Total Earnings $69,872

If he/she earns a dollar per shirt sold and he/she sold 69,872 shirts over 29 designs then he sold an average of 2,409 shirts per design.

Shirts are available for one day only on tee fury and they cost $11

2,409 shirts per design times $11 per shirt is about $26,000 in sales per design.

Right? think i'm doing the math right


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## selanac (Jan 8, 2007)

That sounds just like shirtwoot or something like that.


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## Str8up8up (Oct 26, 2010)

Yeah, TeeFury was started by the guys who started design by humans and their inspiration was Shirt dot woot. Guess my point is that I can't think of many other ecommerce sites other than threadless that sell more shirts than Shirt.woot and TeeFury and they don't seem to get a lot of attention. Although there are several imitators at this point in time, still these guys are arguably the most successful.


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