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Kogan unveils ‘world first’ pricing model

Thursday, 2 December 2010 | By Oliver Milman

Online technology retailer Kogan has unveiled what it claims is a “world first” pricing model that will see products priced according to their manufacturing cycle.

 

 

Kogan’s ‘Live Price’ will allow consumers to choose the point in the manufacturing process that they will purchase a product – during construction, shipping or when the product is in stock.

 

The earlier the customer buys the product, the cheaper it will be. The service will be rolled out in Kogan’s new UK arm before coming to Australia.

 

At an online press conference, Ruslan Kogan, founder and CEO of Kogan, refused to reveal the mechanism behind Live Price, but used the example of an LED television to demonstrate how the system will work.

 

At the start of the manufacturing cycle, the TV costs 330 pounds. A customer can buy the TV now and wait until January to receive it or wait until January and pay 399 pounds for it.

 

Kogan says the system takes out the “hidden cost of finance” and takes out the middle-man.

 

“Even though no other manufacturers or retailers are up front about it; every product you purchase has a cost of finance included in its price,” he says.

 

“Credit can be given by a supplier, bank, or silent investor, but they all have one thing in common – they want a huge return on the money invested into the production cycle.”

 

“At Kogan, we believe in transparency. We're not scared to admit that manufacturing new products means that money needs to be spent up front, which typically means a hidden cost of finance. We just don’t want the customer to have to foot that bill.”

 

Typically, Kogan is keen to highlight the weaknesses of bricks and mortar retailers, saying: "This concept is going to change the world of retail. Our aim is to make consumer electronics more affordable, and we think this is going to force companies to innovate and change their business."

 

“Other retailers are out there asking their Governments for new taxes and regulations to help entrench their market positions. At Kogan we are focused on inventing new ways to create and sell the best value products to more shoppers around the world.”