The Pros And Cons Of Dynamic Pricing

816 Words 4 Pages
Introduction It can be easily expected from a company to offer a static price for their goods and services, but how does static pricing maximize profits? Currently, companies who make sales online are able to collect data on their current and potential customers regarding their demographics and track their search and purchase history. With the collected data, companies can produce a price that may match the dollar value of certain customers – this is called Dynamic Pricing. Dynamic Pricing is a pricing strategy in which a seller collects data and use technologies to flexibly change prices for different people for the same goods or services depending on the person 's perceived willingness to pay for those goods or services. The strategy is …show more content…
Trust is an important key for a merchant/retailer in maintaining a long-term relationship with a customer. "In the marketing literature it has emerged as a key factor in the establishment and maintenance of the long-term exchange relationships that are often critical to firm success," (Garbarino & Lee, 2003). Trust is more important online as there are more opportunities to abuse trust than there is to build …show more content…
On another study on shopper’s perception of price discrimination shows that shoppers who were at a disadvantaged from a price discriminated shopping experience based on “discrimination based on attributes that go against social norms” such as residency, occupation (or income), etc. rated a high level of perceived unfairness and negative emotions towards the pricing inequality. Adversely, those who were at an advantage rated lower, but relatively high on the study’s scale (Wu, Liu, Chen, & Wang, 2012). The same study showed in the results of shoppers surveyed on store choice implies that disadvantaged shoppers would have preferred a store with uniform prices (Wu, Liu, Chen, & Wang,

Related Documents