1

Priceline.com

• A reverse auction site

• The “name your price” concept can be adopted to many industries.

• Providing travel and other services to individuals

• Commission revenues

2

The Business Model• A customer makes an offer (the customer

“names a price”).– The customer agrees to lose flexibility:

• Exact departure times• Connections• A specific airline.

• The customer is bound if the offer is accepted. Credit card is charged for transaction upon fulfillment.

• Priceline matches a seller willing to sell at that price.

3

The Logic• Customers obtain lower prices at the cost of

flexibility -- market segmentation.

• Sellers can sell excess capacity without eroding current markets..

• Use customers’ power.

• Enjoy transaction fees.

4

Potential Weaknesses

• Consumers with bad experiences may deter others.

• Sellers may decide to do it alone, or extract benefits

• Others may begin similar businesses.– Patents. Actions against the patents.

5

Facts about Priceline.com

• Began sales on April 1998 – Leisure airline tickets.

• Expanded into other areas:– Hotel rooms– Car rentals

6

Opportunities

• Ancillary revenues– Customers sign up for other services (credit

card, car rental, etc.)

• Exploiting other markets:– Telephone calls

• Expanding into other areas:– New/Zealand and Australia