![]() Price discrimination is when you sell the same product at different prices. The majority of people think dynamic pricing is the same as price discrimination, and that is a huge mistake because they are two different concepts. MYTH #2: Dynamic pricing is the same as price discrimination For any dynamic pricing software, it is practically unacceptable not to include this feature. It is vital and essential that you or someone else in your company understand what the program is doing.Īnother point that destroys any argument that dynamic pricing is a black box is the following: Any dynamic pricing software has to include in their system a tool that explains step by step everything and how the program arrived at that recommendation or solution. They are the ones that create the pricing rules and modify the prices if they want to on their products. That is false because humans have their input in the software. There is the common thought that dynamic pricing works as a black box. ![]() In the following lines, we are going to debunk the most common myths about dynamic pricing. ![]() While they have this misconception, companies like Uber, Amazon, and Alibaba are leading competitors in their sector by using dynamic pricing. That, with no justification at all, because more companies are using it. There are still some organizations, and media, that label dynamic pricing as a negative thing. As time passed and technology advanced, this process became more automated, and more companies are using it. Years later, airlines decided to invest large amounts of money on price software and had large teams analyzing the data, and they were in charge of setting price rules. At that time, one person was in charge to manually change the prices, depending on different factors such as time of the day, seats left on the plane, and flight length. In 1980, airlines were the first industry to modify prices throughout the day. These sectors have been using this technique for many years. ![]() While Uber is relatively a ‘new company’ (founded in 2009), believe it or not, companies had been using this strategy before, and people already faced the dynamic pricing strategy in the past. This method is called dynamic pricing.ĭynamic pricing is a strategy that allows a company to modify its prices according to various aspects, such as competitor’s prices, market demands, and other factors. And it goes the other way around: when there is a low demand for the service, prices go down. Sometimes you might encounter that the prices go up when it is raining, or when most people finish their work shift in the afternoon or on a busy night. A driver comes in a car, picks you up, and takes you to the final destination (point B). If you don’t know what Uber is, it is a transportation company where you set your desired location (point A) on your smartphone. Most of us probably know Uber, heard of it, and even used the app before. Posted on 03 June by Simon Gomez in Dynamic pricing ![]()
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