Pricing in the News: Parking Meters and Freemium Games

Last week I stumbled upon a few interesting articles in the New York Times on some prior topics of this blog.  The articles really speak to the evolution occurring in these industries and provide some great insights, so I thought I would summarize what I discovered:

NY Times: A Meter So Expensive, It Creates Parking Spots

As I noted in a post last year (The Evolution of Parking Meters: From Coin Operations to Dynamic Pricing), San Francisco has undertaken a project to ensure a parking spot on every block by enabling meters to dynamically price according to demand.  While the new system is expected to increase revenue, the program also aims to reduce congestion as it creates more available parking spots.

Well, it has been almost a year and it looks like the program is working.  According to an analysis by The New York Times, a third of the blocks in the program have hit their targeted occupancy rates in any given month since the program began [and] three-quarters of the blocks either hit their targets or moved closer to the goal.  Also good news, the pricing model appears to be yielding more revenue.  While not an exhaustive analysis, Times data (top left) shows two examples of meters not only improving their effectiveness (i.e., utilization) but also increasing total revenues (12% in Fisherman’s Wharf and 20% Downtown).

With that said, the article does raise one concern with the program: how will the new meters impact the social demographic in each area.  This is a great question and one that is hopefully top of mind for city planners.  Pricing strategy must align to corporate strategy, and I hope the city ensures San Francisco’s parking prices fit with its social demographic goals.

For now, I (as well as many other cities) will continue to watch San Francisco’s progress.

NY Times: Playing at No Cost, Right Into the Hands of Mobile Game Makers

Last year I wrote about console game makers moving to a new pricing structure that focuses on selling in-game premium features (A New and Improved Pricing Structure for Video Games), but perhaps the bigger story is how mobile games are using a similar freemium strategy to monetize.

Using the popular game Temple Run as an example, the New York Times explains how gamemakers are increasing revenues by using a pricing strategy that allows users to download games for free and then pay for additional levels or other premium features.

How popular is this freemium pricing strategy?  Flurry, a mobile-software analytics company, estimates that 65 percent of all revenue generated in the App Store — roughly $2 billion — has come from free games that charge for extra goods. 

The good news for consumers is that as the app market continues to grow I only see this trend continuing.  The question for businesses is can/should you use this strategy?