OnDemand WTP Pricing Research

Dynamic Pricing for Demonstrable Profits | Electronic Retailer

ER: Are there any risks to this approach?
JJ: Dynamic Pricing and offers can certainly incite grumbles among customers who pay more for the same product than a friend. When Amazon first tried this by discounting DVDs for its loyal buyers and charging more to new buyers, it became a public issue and received a good deal of backlash, causing Amazon to refund the difference in price. But, if you think of the airline and hotel industries, prices fluctuate constantly, and this pricing strategy enables them to maximize revenues. The same holds true for the retail industry, where major brands like Home Depot and Lowes often vary pricing based on a shopper’s location (identified through IP address). This is not a new concept, nor is it one that will go away anytime soon as the technology that makes it possible becomes more accessible.

ER: How can retailers identify price and discount thresholds necessary for a customer to convert?
JJ: It all boils down to data on the individual’s shopping history, demographic info, browsing behaviors, propensity to purchase, sensitivity to pricing and more. Some retailers choose to collect this data themselves, while others look to outside vendors. Either way, data collection is becoming a “must” in the retail space—not a want.

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Dynamic Pricing for Demonstrable Profits.

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