Dynamic pricing

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Dynamic pricing , also called surge pricing or dynamic price management, is a pricing strategy in which companies adjust the prices for products or services based on current market needs. It is a model that calculates prices using automatic algorithms . Factors such as competitor pricing, supply and demand, and other external factors are included. In addition, behavioral factors must also be taken into account.

Dynamic price management is common practice in lines of business such as the hotel industry , tour operators and flight providers, as well as in online retail. Dynamic pricing is mainly used on the Internet in online mail order or online auctions . Dynamic pricing is also used by airlines to adjust flight prices to certain times of the day, days of the week and days before departure. Airlines also base their pricing on the time of departure, the average cancellation rate for similar flights and the number of seats on the flight in question. For this reason, it is often possible for airlines on the Internet to detect significant price fluctuations for the same product within a very short period of time. A flight booking to some destinations can be bought five days before departure, for example, much cheaper than booked ten weeks in advance. Conversely, a flight ticket bought just a few hours before departure can cost many times the starting price.

The price data of competitors is automatically read out from databases and adjusted. This data is collected by price bots . A computer program then uses the data to calculate the respective prices based on the business rules .

For US sporting events there is also dynamic pricing; The calculation must then ensure that the fans who are particularly important for the clubs with annual tickets can continue to enjoy the cheapest ticket prices in order not to lose them.

Vehicle service providers use this pricing strategy to tailor their service based on market supply and demand. In times of high demand, the fare is adjusted to the increased demand using a multiplier factor. The transport service providers want to get more drivers on the road in the event of bottlenecks.

The economic theory development for dynamic pricing takes game theory into account ; Companies not only want to understand the short-term acting customer, but also the strategic planner.

literature

  • Anika Schröder: Dynamic pricing for parallel flights. Papierflieger, Clausthal-Zellerfeld 2008, ISBN 978-3-89720-950-3 (also dissertation at Clausthal University of Technology 2008).
  • Martin Spann, Bernd Skiera: Dynamic pricing in the digitized world . In: Schmalenbach's Journal for Business Research (zfbf), 72, doi: 10.1007 / s41471-020-00095-0 (open access) .

Individual evidence

  1. ↑ dynamic pricing , WhatIs, accessed on September 6, 2014
  2. ↑ Martin Spann, Bernd Skiera: Dynamic pricing in the digitized world . In: Schmalenbach's journal for business research . June 26, 2020, ISSN  2366-6153 , doi : 10.1007 / s41471-020-00095-0 ( springer.com [accessed July 10, 2020]).
  3. ↑ dynamic pricing , ITWissen, accessed on September 6, 2014
  4. ^ Tucker Cummings: Everything you need to know about dynamic pricing . The Christian Science Monitor, November 4, 2013, accessed September 11, 2014
  5. ↑ Dale Furtwengler: The perils of dynamic pricing: Lessons learned from the airline industry . retail customer experience, September 15, 2011, accessed September 11, 2014
  6. ↑ Bettina Seipp: When to book which flight cheapest . Die Welt, January 21, 2014, accessed on September 11, 2014
  7. ↑ Andrew Nusca: The future of retail is dynamic pricing. So why can't we get it right? , ZDNet October 2, 2013, accessed September 6, 2014
  8. ↑ Patrick Rishe: Dynamic Pricing: The Future of Ticket Pricing in Sports. forbes.com, June 1, 2012, accessed September 23, 2014
  9. ^ Rachel Clun: Uber warns of New Year's surge pricing, while taxis ask for patience . In: The Sydney Morning Herald . December 29, 2017 ( com.au [accessed January 11, 2018]).
  10. ↑ Information on one page of the Robert Klein chair, University of Augsburg ( Memento from November 30, 2012 in the Internet Archive )