pricing scheme
Thursday, March 26th, 2009iTunes is implementing a “popular songs cost more money” policy starting today. I propose the following program for any infinite good:
*All goods start at $.01. The early purchaser gets a deal!
*Cost increases by one penny (or some increment) with each purchase. So the second guy to buy pays 2 cents, and so on.
*Once a certain price point is reached (possibly just one penny), a “decay function” sets in, that starts dropping the price for each time unit in which no purchase is made.
In this way, a natural dynamic price equilibrium is reached, and your customers are always paying essentially what the market will bear. Early adoption (and thus experimentation) is encouraged. Popularity is rewarded. Time, the resource that is scarce, rather than number of copies, is priced by the market.