Revenue management in the travel industry used to be considered an artform - but now brands should think of it in scientific terms.
That's the message behind Perfect Price, a San Francisco, US-based startup that has created a data-driven platform for managing pricing of products.
The company has some pedigree on its team (not least with its CEO coming from the camp of brainiacs who built the TripIt service) and ambitions to Uberise the process of forecasting and handling demand.
Video:
Q&A with CEO and co-founder Alex Shartsis:
What problem does your business solve?
We enable any company to deploy the kind of demand forecasting and revenue management used by Uber.
Names of founders, their management roles, and number of full-time paid staff?
- Alex Shartsis, CEO, early TripIt BD guy who launched the API, and did TripIt’s deals with American Express, Hotwire, Expedia, Google, and Microsoft.
- Youngin Shin, CTO, formerly Microsoft and Twitter search engineer, with a PhD and decades of experience in machine learning and artificial intelligence.
Team of six, all engineers, mostly PhDs, based in San Francisco, California.
Funding arrangements?
Received seed funding from Silicon Valley and travel industry insiders including Steven Tamm, CTO of Salesforce.com, Will Aldrich, former VP Product at TripIt and SurveyMonkey, Dustin Robertson, CMO Vegas.com, Sean Byrnes, cofounder Flurry, and many more like them.
Revenue model?
We are a SaaS service, fully hosted and scalable. Customers pay an annual license fee.
Why do you think the pain point you’re solving is painful enough that customers are willing to pay for your solution?
Revenue management, demand forecasting - even just running a data warehouse and getting insights out of it - challenge even the most well equipped travel companies.
We simplify this huge, risky effort with the best algorithms, fastest time to value, most intuitive dashboards (designed by a respected consumer internet designer) and the agility of a small company.
Legacy vendors pricing rental cars, air, hotel, tickets or packages depend on armies of analysts to build and maintain models, driving up costs, extending time to value, and putting the careers of the people who green light these projects at risk.
The most advanced - like Hotwire - have resorted to large, in-house teams and extensive rule-based pricing spaghetti that, decades later, is hard to manage.
Hiring a legacy vendor means paying millions for a system that is obsolete before it goes live, because the integration process can take years.
Our solution has proven to increase revenues, utilization and profit dramatically–in less than one quarter.
It can be deployed in a fraction of the time typical of traditional solutions, either to augment an existing capability or create a new capability from the ground up.
And unlike legacy systems, it works exceptionally well not only for traditional models, but also for P2P models.
External validation?
Uber’s head of pricing, Robert Phillips (who also wrote the textbook on revenue management) is on our advisory board, as are many other industry leaders.
We were part of the Alchemist Accelerator, an SAP, Salesforce and Microsoft-backed (among others) accelerator for start-ups selling to the enterprise.
But the real proof is our happy customers.
Repeatedly we have proven the power of machine learning in general, and our solution specifically, to solve what has, traditionally, been a very difficult, time consuming, and risky problem.
Tnooz view:
The good news is that there is obvious scale to be grabbed by a business such as Perfect Price.
As so many brands realise that channel management and pricing is only going to get more complicated, being able to automate various processes and apply some new thinking to revenue management is only going to help them in the long term.
In other words: there is a definite problem that needs solving.
Perfect Price may be a victim of its own success, however, with a delicate balance needed to both grow business from a resource perspective and stay within its modest financial model.
What will be interesting to watch over the coming months and years, if it gets a sizeable level of traction, is if the Big Boys of the industry decide that its technology and people are worth taking a punt on.
Brands such as the Priceline Group have already moved into this area with the acquisition of PriceMatch a few years back.
Other vultures may circle this fledgeling company rather quickly.