As we’ve mentioned before, Farecast is an intriguing product that uses statistics and historical data to predict trends in fares. Now, the company if offering to lock in ticket prices against an increase for one week for $1 during the initial release. It will eventually increase to $10.
The product, Fare Guard, guarantees that if Farecast recommends you wait for a decrease in price during the coming week, and that price does not materialize, it will send you the difference between the price you paid and what it predicted you could get the coming week. The company is gambling on its accuracy rate, which it pegs at 70 to 75 percent. The Seattle Times had pegged the number in its own experiments at 61%…a number the company disputes.
If Farecast’s accuracy rate is as high as it predicts, and the service is a success, then, like the insurance industry, it will be able to make a profit over gambling on its successes outnumbering the cost of its failures. Either way, a guarantee of its prediction for seven days is certainly a unique and new revenue stream for the company.