An Analysis
on Pricing
Strategy
Group 6 – Section B
Vinay, Manali, Anurag,
Titiksha, Sunidhi
Vision:
To make women
feel empowered and selfconfident every single day
❖A dream closet filled with an
infinite selection of designer
styles
❖With an unlimited closet,
women can more freely
express themselves and
dress for a big event or
rotating outfits for everyday
❖Co-founders - Jennifer
Hyman and Jennifer Fleiss
About Rent The Runway
Size of Fashion
Market
❖ The fashion market is growing. By
2022, it is projected to be twice the
size it was just two years ago.
❖ That growth is coming from the
expansion into new markets, such
as the burgeoning Chinese middle
class, and from the growth of
completely new sectors, such as
fast fashion and online retail:
Business
Model
Canvas
How it works
RENT 4 STYLES AT A TIME
Choose from thousands of designer
pieces – every trend & color imaginable.
SWAP ON YOUR SCHEDULE
Your choice: Get new pieces once
a month or on constant rotation.
NO COMMITMENTS
Pause or cancel your membership
anytime. It’s always flexible.
Subscription Rental
Service
A survey of 15,783 consumers shows
that subscription retail services are
also growing. In the US,
❖ Over 17% of millennials have
rented clothing or accessories
❖ Over 11% have tried a subscription
clothing service
❖ 18% have used a beauty
subscription service
❖ Over 30% have tried a grocery or
food subscription service
Plans at Rent The Runway
RTR Update
RTR Unlimited
Perfect if you want to..
Refresh your wardrobe
each month
Wear new outfits all the
time
Items at home
4 for a month
4 on constant rotation
Swaps
1 swap per month
Unlimited swaps
Total items per month
4 items
Unlimited items
Styles included
350+ Brands
500+ Brands, including
premium designers
$69 trial month
$89 per month
$99 trial month
$159 per month
Subscription-based model
Explained
❖ In subscription-based model, you have to constantly show value to customers if
you want them to keep paying. Rent the Runway is doing exactly that
❖ This is the first business model in the history of mankind that connects you
directly to the customer. The relationship is built right into the revenue model.
Every month, if they haven't built that relationship enough, people are going to
say, 'I don't need this
❖ Rent the Runway is building entry points for brand experience
The lowest tier on Rent the Runway isn't free, but it offers the same low-friction
introduction to the service and brand. For just $30/rental the RTR Reserve tier gets
customers that might be skeptical in the door. All they then need is one or two
successes with the brand—someone telling them they look great in that outfit on a
night out, looking awesome on an Instagram post—and they are ready for the
upgrade.
Price Sensitivity at
Rent The Runway
❖ The current pricing for four pieces
in the RTR Update plan is $89 per
month. But the median willingness
to pay for this plan, from the 3,423
Rent the Runway customers
surveyed, is over $100. They are
basically leaving $10 on the table
for each customer with this plan
❖ For the RTR Unlimited plan, the
willingness to pay initially looks
right on the money. The plan's
pricing is $159 and the median
willingness to pay is $155. But
there is an opportunity with the
upper quartile of customers. They
are willing to pay over $200 for the
RTR Unlimited plan. Again, money
left on the table that could be
RTR's.
Reference:
https://www.priceintelligently.com
Key Takeaways
❖ There are these natural barriers that occur right around
the $99 mark, the $150 mark, and the $200 mark.
Essentially, if you are an $89 product, you should just
be a $99 product.
❖ Because of the higher willingness to pay and the fact
that the natural anchor price point is $99, Rent the
Runway can increase the pricing in their Update plan
without problem to capture more of that value from
their customers. They could bump up the Unlimited as
well, but then they risk leaving too far a gap between
the Update and Unlimited plans and damaging the
brand.
❖ The answer: “Premium premium.” An offering for
“things that feel really, really important but that are
also low-cost as they are already in your infrastructure.
This doesn't scare away customers looking to move up
from the Update plan to Unlimited, but also offers Rent
the Runway an opportunity to boost ARPU from those
customers that are willing to pay for that something
Thank You