Intelligent Pricing / Dynamic Tariffing
Sweating your network assets
• Increase ARPU by up to 5%*
• Reduce CAPEX
• Win new customers
• Build loyalty
*actual results in current system implementations show improvements from 5% to 14%
Intelligent Pricing offers pre-pay subscribers variable discounts which are based on the availability of capacity and demand on their serving cell. This is also known as dynamic cell based tariffing.
Network Usage & Revenue
In any form of business, long term success is linked to cost leadership. This means that you have to have the lowest cost for delivering a unit of value to the customer.
Your costs are largely the same, irrespective of how many subscribers are using your network at a given time. However, at any given moment, more than 50% of your network’s capacity is unused. You must build for peak demand to avoid congestion. Demand varies throughout the day with different profiles in each area. A business district cell will, for example, be very busy during business hours, but quiet in the evening. Conversely a suburban cell will be quiet during the day and busy in the evening. This means that every cell, at certain times of the day, has a large amount of unused capacity. You are paying for this capacity, but you are delivering no value to your customers from it.
Yet at the same time, you cannot simply cut prices to boost demand. Not all of your customers will respond to price cuts by making more calls. You may easily give away more than you gain.
Your network peak load is probably also already under increasing pressure. To keep your high usage, high value, customers happy you cannot afford to boost demand at peak times with low value traffic.
The answer is to implement Intelligent Pricing.
Getting More Value from the Network
Intelligent Pricing is designed to makes use of your spare capacity and to maximise the overall extra revenue that is generated.
It offers this “spare” capacity at discounted rates to price sensitive market segments. Because the discounted rates are tied to dynamically changing times of day and locations, the cannibalisation of existing business is kept to a minimum.
The results from existing implementations show a number of effects:
• New, highly price sensitive, users are brought onto the network for the first time
• Existing price sensitive users spend more
• Scheme users are less likely to “SIM swap”
• More “return calls” are generated back to scheme users
• Usage at peak times and locations is reduced, relieving the pressure for more network investment
• The network has a clear competitive advantage
Depending on other conditions in the market, results so far have shown overall ARPU improvements of between 5% and 14% for those subscribers who engage with the scheme. The gains from “return calls” and positive effects on churn are also very real but are more difficult to measure accurately because of the effects of other factors.
How It Works
The discounted tariffs are calculated by a sophisticated engine that is based on “SWARM” technology. This takes into account a range of factors including available capacity, available demand and price elasticity of available demand in order to calculate a tariff. The tariffs are designed to maximise overall ARPU.
This approach is much more sophisticated that a simple “off peak” tariff plan:
• It is based on individual cells and can therefore be targeted at precisely the places on the network where there in unused capacity
• It is based on availability of demand, so avoids offering unnecessary discounts
• It is based on price elasticity and therefore increases overall ARPU
• It is highly variable and is therefore difficult to a user to predict the level of discount that will apply, hence reducing SIM swapping
• It provides a service for very cost constrained users without cannibalising existing business
System Implementation
Intelligent Pricing can be added to your network with the minimum of integration. The system is self-contained, generating standard messages for your existing network components including your current pre-pay platform. Because no changes are necessary for your existing pre-pay platform, Intelligent Pricing can be easily integrated into a network with multiple types of pre-pay platform. It also leaves you free to choose any platform when you next upgrade your system.
Intelligent Pricing is based on the open standard ENGINE applications platform. Once ENGINE is implemented it can also be used to deliver a wide range of other applications. These include additional advanced pre-pay functions such as shared pre-pay “pots”, friends and family discount and reverse charge calling. Also available are applications in roaming, messaging, fraud management and VPN.
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