Priceline launched in 1998 when Jay S. Walker first introduced its “Name Your Own Price” service for purchasing airline tickets online. Priceline flipped the conventional system of purchasing goods by having the buyer “set” prices.

Typically, sellers advertise a good in the marketplace at a specific price, and buyers decide whether they want it. Priceline designed a mechanism whereby customers logged on to the company website, posted an “advertisement” that indicated where they wanted to go, the dates of travel, and the price they were willing to pay. Priceline then searched the databases of partnered airlines for compatible tickets. Customers had to be flexible about the carrier and the time of day for their flight; they received their ticket and carrier information only after the transaction was completed.......

1. How important was the Name Your Own Price approach to Priceline’s market success?

2. What are the pros and cons of the Name Your Own Price approach to setting an offering’s price?

3. Is setting prices based on one’s willingness to pay fair? Does it create value for customers? Does it create value for the firm?