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Pricing strategies and tactics vary from company to company, and also differ across countries, cultures, industries and over time, with the maturing of industries and markets and changes in wider economic conditions. [2] Pricing strategies determine the price companies set for their products. The price can be set to maximize profitability for ...
Price optimization utilizes data analysis to predict the behavior of potential buyers to different prices of a product or service. Depending on the type of methodology being implemented, the analysis may leverage survey data (e.g. such as in a conjoint pricing analysis [7]) or raw data (e.g. such as in a behavioral analysis leveraging 'big data' [8] [9]).
It is differentiated from other pricing models by the extent and accuracy of the competitive pricing analysis. [1] The technique can be applied by companies seeking to optimize their own pricing strategy relative to their competition, [1] or by buyers seeking to optimize their purchasing strategies. [2]
Pricing science is the application of social and business science methods to the problem of setting prices. Methods include economic modeling , statistics , econometrics , mathematical programming .
Yield management (YM) [4] has become part of mainstream business theory and practice over the last fifteen to twenty years. Whether an emerging discipline or a new management science (it has been called both), yield management is a set of yield maximization strategies and tactics to improve the profitability of certain businesses.
The BO discriminatory pricing scheme is to offer one agent a price of $150 and the other agent a price of $100. Its expected revenue is 0.5*150 + 0.5*100 = $125. In practice, however, an auction is more complicated for the buyers since it requires them to declare their valuation in advance.
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Predatory pricing is a commercial pricing strategy which involves the use of large scale undercutting to eliminate competition. This is where an industry dominant firm with sizable market power will deliberately reduce the prices of a product or service to loss-making levels to attract all consumers and create a monopoly . [ 1 ]