Opaque Selling

Opaque selling is a pricing strategy where certain characteristics of the product or service, most notably the service provider’s identity, are hidden from the consumer until after the purchase has been completed. This approach first became popular in the travel industry for services like hotel rooms, airline seats, and rental cars.

Opaque selling allows firms to sell their differentiated products at discounted prices to price-sensitive customers without revealing these discounts to customers willing to pay full price through traditional channels.  This prevents the cannibalization of sales that might occur if the same discounts were offered on full-information channels.

I have been researching opaque selling for over 10 years as it has ebbed and flowed in popularity. I have also been part of two startups – PriceWhispers back in 2009 was a Name-Your-Own-Price model that retailers could add to their website, more recently I was part of Bazo which launched a NYOP marketplace analogous to Sample Sales.

While I have many papers in this space, the following conversion provides an introduction into opaque selling and highlights results from these two papers.

CK Anderson. 2009. Setting Prices on Priceline. Interfaces, 39(4), pp. 307-315.
CK Anderson, with X, Xie. 2012. A Choice-Based Dynamic Programming Approach forSetting Opaque Prices. Production And Operations Management. 21(3). pp. 590-505