Pricing - The Power Of Comparison, Dynamic Pricing

Although the pricing of products and services may appear to be simple at face value, there actually are many different dimensions to pricing in the business world. Pricing is a major component of any business strategy, online or otherwise, and companies take a variety of strategic approaches to pricing depending on their particular goals. The objectives of pricing can include everything from gaining market share, eliminating competitors, and reinforcing the position of a brand's image to simply selling high volumes of a product or service.

Generally, consumers seek to buy more when prices are lower and less when prices are higher. However, things are rarely that simple. Emotions and status also play critical roles in the pricing process, and shrewd marketers are able to tap into the minds of buyers and charge more money for so-called luxury items or status symbols. They also employ different pricing tactics, including odd-number pricing (selling an item for $19.95 as opposed to $20.00), in their attempts to sell goods and services.

In the physical world, the majority of sales transactions occur in face-to-face situations. Although some negotiating may take place, prices for goods and services are often fixed for consumers, and sellers possess a great deal of control. Consumers make purchases with relatively limited capabilities for quickly comparing prices from other sellers. Such is not the case on the Internet, where new sets of variables affect pricing. Online, both individual and business consumers are able to quickly find pricing information for similar or identical items from many different sellers in a matter of seconds. Additionally, individuals can use different tools, including software programs called intelligent agents (also known as shopping bots), to search the Internet for the best price and report back results. In some cases, intelligent agents also negotiate terms and prices on behalf of users, taking the search process a step further. Chat rooms and online communities also work to quickly spread the word about where the best deals can be found online.