Most firms use a Fixed price policy. That is, they examine the situation, determine an appropriate price, and leave the price fixed at that amount until the situation changes, at which point they go through the process again. The alternative has been variable pricing, a form of first degree price discrimination, characterized by individual bargaining and negotiation, and typically used for highly product differentiation high value items (like real estate). Price discrimination exists when sales of identical goods or services are transacted at different prices from the same provider. ...

Two variants of variable pricing are price shading (in which sales people are given the authority to vary the price by a certain amount or percentage), and auctions (in which potential buyers have the option of bidding on a product and thereby varying the price). Consumers generally prefer fixed prices because they don’t need to worry about being out-negotiated by a professional with expert knowledge and skills. The exceptions are people that enjoy the social aspect of negotiating, and people that think they might have an advantage due to their product knowledge or negotiating skills.

Due to advances in technology, another variant of variable pricing, called real time pricing, has arisen. In some markets events occur so fast that there is insufficient time to either set a fixed price or engage in lengthy negotiations. By time you have all the information to determine a price, everything has changed. Examples include Airline tickets,Stock|equity markets and currency markets. In each case prices can change in less than a second. By linking all the market participants through internet connections, price changes are disseminated instantly as they occur.

A variant of real time pricing is online auction business model(such as eBay). All participants can view the price changes soon after they occur (technically this is not quite real time pricing because there is a delay built into the eBay system). Traditional auctions are inefficient because they require bidders (or their representatives) to be physically present. By solving this problem, online auctions reduce the transaction costs for bidders, increase the number of bidders, and increase the average bid price.

In addition to these examples of variable pricing in the short term, there are long term pricing practices that could be considered instances of variable pricing. They are price skimming, penetration pricing, and discount|seasonal discounts.

This kind of price discrimination is largely and widely used by rental car companies. Usually those firms need to know what your country of residence is so they can adjust the price. Depending on the answer you can get significantly different quotes for the same vehicle, date and time of rental. It is also true when accessing the rental car site through the .com main site .

See also

• pricing
• marketing
• Yield management
• Geo (marketing)
• e-marketing
• auction

This article does not cite any references or sources. ... Next big thing redirects here. ... Yield management, also known as revenue management, is the process of understanding, anticipating and reacting to consumer behaviour in order to maximize revenue or profits. ... In marketing, geo (also called marketing geography) is a discipline within marketing analysis which uses geolocation (geographic information) in the process of planning and implementation of marketing activities. ... E-marketing is a type of marketing that can be defined as achieving objectives through the use of electronic communications technology such as Internet, e-mail, Ebooks, database, and mobile phone. ... An auctioneer and her assistants scan the crowd for bidders An auction is a process of buying and selling goods by offering them up for bid, taking bids, and then selling the item to the winning bidder. ...

References

• Maglaras, C., Meissner, J. "Dynamic Pricing Strategies for Multi-Product Revenue Management Problems." MSOM 2006.