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Discover: “Dynamic” Pricing

Dynamic pricing is a pricing strategy that has become increasingly prevalent in the business world

Flexible figures

A growing number of companies are using “dynamic” pricing

A growing number of companies keep their prices in a constant state of flux – moving them up or down in response to an ever-shifting multitude of variables. Businesses have always offered different prices to different groups of customers. They offer “matinee specials” for afternoon cinema-goers or “happy hours” for early-evening drinkers. They offer steep discounts to students or pensioners. Some put the same product into more than one type of packaging, each marketed to a different income group. Dynamic pricing takes all this to a new level – changing prices by the minute and sometimes tailoring them to whatever is known about the income, location and spending history of individual buyers. The price of goods and services sold online can be varied constantly and effortlessly, in accordance with the numbers and characteristics of those making purchases, and factors such as the weather. The practice is spreading to physical retailers, which are installing electronic price displays and borrowing pricing models from e-retailers.

The Economist (2016) A Growing Number of Companies are Using “Dynamic Pricing”, 2016, 1, 30.

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