ABSTRACT
The economic forces that determine profitability change whenever technology, regulation, market information, consumer preferences, or relative costs change. Consequently, companies that grow profitably in changing markets often need to break old rules and create new pricing models. For example, Netflix changed the model for renting films from the daily rate at video stores to a time-independent membership model. Ryanair radically unbundled the elements of passenger air travel-charging separately for baggage, seat selection, in-person check in, beverages-enabling it to generate greater occupancy and more revenue per plane per day than its established European competitors. Producers of new online media created a new metric for pricing ads-cost per click-that aligns the cost of an ad more closely to its value than was possible in traditional media. Apple changed the market for music in part by pricing songs rather than albums.
