Stochastic pricing – Is this the future?

Freshly out of the Quantitative Methods course and into Quantitative Methods course part 2 in this term, forces me to see the text more in terms of numbers and statistics. Off late one word which catches my fascination is a seemingly complex statistical jargon known as “Stochastic”.
If one traces the roots of the word, the roots lie in Greece and means “Skilled at aiming”, since stochos is a target. In very layman’s terms, it is an approach in which a target value is calculated probalistically based on a combination of variables.

This reminds me of some of the backdated issues of Economist. People are talking of stochastic pricing for Baseball matches. Sounds intriguing to say the least, but makes business sense. And if one thinks through, it is a win-win situation for both the buyer and the seller.

http://www.economist.com/blogs/freeexchange/2009/05/taking_the_hub_out_of_stubhub\

Taking cue from this idea, big cold drinks giant came up with the idea of coming up with a vending machine which will sense the outside temperature and other stuff (read as variables) and come with the price of the can. It was an attempt for stochastic pricing. I am not too sure why the idea was abandoned.

Extending the pricing for IT. One is hearing pricing based on

-          - Number of incidents for Application management.

-          - Number of defects or rather absence of defects for application development.

-          - Availability percentage for application support

Going by the same logic, am I staring at a future where salaries are determined stochastically? ;-)

Let us hope not, but pricing the services and products stochastically is indeed something companies should look forward to. But there are many variables to consider!

Want to do your bit for the country? – Simply Marry???

It was Friday, Christmas morning of 2009. I went out to have my regular cuppa and the first page on DNA asks me to forget Pranab.
http://www.dnaindia.com/money/report_forget-pranab-real-stimulus-is-in-big-fat-indian-wedding_1327247
I sip on and ponder on the headline for a while. The cynic in me immediately says this is all ****- ****. I decided to take on the challenge. Armed with lethal weapons like Google and Google, I carry on. For the benefit of the huge fan base of this blog (don’t try smelling sarcasm here, I have 7845 mails from my fans asking me to begin blogging!), these are some of the facts which were presented.
- Half of India is less than 29 years.
- Marriage contributes around 4% of GDP, which is 3rd largest contributor.
- Average wedding spending 1-15 lakhs for the great Indian Middle Class.
- 200- 600 Crore industry/year spent on weddings.
- Growth is easily double digits (Yes, I said double digit growth).
Looking at these numbers, I am compelled to believe the Indian Growth Story in quite a non-literal sense ;-)
There are few more things which I think the report missed. Thanks to urbanization and moving to nuclear families, the bonding between the couples in on a decline. There are innumerable divorces and quite a lot of remarriages (Read more moolah).
And this is not all; government is milking on this industry as well. Have a look at
http://www.expressindia.com/latest-news/tax-evading-marriage-industry-put-on-tight-leash/258955/
For some my friends of opposite sex, who simply love to be in some marriage, be it anyone’s (literally). It is time to hone your planning skills. There is money for the budding entrepreneurs.
The Hindu puts it best.
http://www.hinduonnet.com/jobs/0108/05290021.htm
I humbly surrender to the analysis and can certify “ALL IS WELL” with the report.
So dear friends,
Marriages may be made in heaven, but the moolah can be made right here.