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Telfar’s Dynamic Pricing Model Offers a New Way to Gauge Luxury Item Demand

Written by Tom Ryan

Photo: Getty Images / Edward Berthelot

Telfar, the Black-owned luxury label known for its tote bags, has introduced a “Live Price” pricing model based on customer demand. Instead of pre-setting retail prices, the price of many items will instead be determined by how quickly they sell out after they drop, with the item remaining cheaper the faster it sells. The pricing model was introduced Monday with the online introduction of the brand's latest collection and will be tested with weekly drops through April 24. Telfar’s collections have a reputation for quickly selling out. Under the model:
  • At the drop time, each item in the range becomes available at the wholesale price (the price retailers pay), which is generally more than 50 percent off retail price.
  • The introductory price then rises slowly (about one cent every 20 minutes or about $10 to $20 every week).
  • Whatever price it sells out at, the discounted figure will be the price permanently for future collections.
Telfar explains on its website, “YOU DECIDE THE PRICE: the more you want it - the lower the price.” The pricing model is designed to support the affordability of the brand’s most-popular items. Founder Telfar Clemens has long emphasized the importance of accessibility for his products, describing his brand as “anti-luxury” and using the tagline, “not for you – for everyone.” From an operations standpoint, the auction-like determination process helps Telfar get an early read on demand. For quick sellers, larger volumes can be ordered to support the lower price. “Many brands use price as a barrier to entry,” said Mr. Clemens in an interview with Fast Company. “I never wanted that for my brand.” The launch announcement drew some confusion on social media with some feeling dynamic pricing would only make the brand’s product scarcer, but others praising the brand for seeking ways to make their products more accessible. YouTube influencer Dee Brady feels shoppers will now be “happy” instead of being disappointed when a collection quickly sells out because they’ll know the item will be available at a low price when it’s back in stock. She said, “It actually triggers someone to buy more.”

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