demand-based pricing

demand-based pricing

pricing methods which determine the PRICE of a product primarily on the basis of intensity of demand rather than on costs of production and distribution. There are several facets of demand which are relevant to pricing:
  1. Firms may vary their prices over time as demand for their products changes as a result of BUSINESS CYCLES, charging higher prices when demand is strong and shading down prices in conditions of weak demand. More specifically, particular products will be subject to variations in demand over their PRODUCT LIFE CYCLE with implications for pricing. High skimming prices may be charged for a novel product in the early launch phase of its life cycle when demand is price-inelastic, with lower prices and larger promotion expenditures in the later, growth phase of its life cycle;
  2. Firms may also practise price discrimination, varying prices between types of customers, the location of customers, the time of purchase and versions of a product. Customer-based pricing recognizes the different bargaining power of potential buyers and seeks to capitalize on this by charging whatever price particular customers are prepared to pay. For example, in pricing theatre tickets special low prices may be charged to low income, price-sensitive consumers (for example, students and pensioners), and price discounts may be offered on block bookings. In addition, prices may be scaled for theatre seats in different parts of the theatre, with higher prices for the stalls and lower prices for the upper circle. Furthermore, different prices may be charged on different days or at different times of the day, with higher prices for weekend evening performances and lower prices for mid-week afternoon matinée performances. Finally, prices can be varied according to the version of a product, with different prices for a particular model of car, for example, according to whether the customer specifies fabric or leather seats. See ELASTICITY OF DEMAND, COST-BASED PRICING, COMPETITION-BASED PRICING.
References in periodicals archive ?
Historically we've worked on demand-based pricing, but this has consistently left unanswered questions about the best way to boost performance - both in peak demand periods and the low season.
These demand-based pricing strategies have resulted in revenue increases of anywhere from 5-30% (Rishe, 2012).
PriceYourRoom will enable access to daily BAR recommended demand-based pricing as well as direct distribution to proper electronic channels.
Chief executive Alan Whiteley said: "We are all excited about the positive impact that demand-based pricing will have on both our attendance and revenue next season.
Pricing technology provider Digonex announced on Wednesday that the Derby County Football Club (DCFC) will be using its demand-based pricing services via a partnership with event ticketing solutions and services provider Tickets.
Using the demand-based pricing booking system, guests can book rooms at prices starting from USD3 (or even lower during promotion periods) through the web at www.
Second, continued technology improvements--including sophisticated property management systems, online rent-payment solutions and demand-based pricing models--have made economies of scale achievable in property management.
LA ExpressPark[TM] goes live, an advanced parking system developed by Xerox (NYSE: XRX) and the Los Angeles Department of Transportation (LADOT), that applies new technology and demand-based pricing to increase the availability of limited parking spaces, relieve traffic congestion and reduce air pollution.
RM and Demand-Based Pricing in Sport Professional sport organizations have embraced demand-based pricing over the past 10-15 years.
Xerox receives the award for its MergeA system, a city-wide sensor based, smart parking solution that reduces traffic and congestion through guided parking with demand-based pricing.
In related news, Qcue CEO Barry Kahn will join industry ticketing leaders today at PACnet, Paciolan's annual community conference, to share dynamic pricing best practices in the session titled, Flex Your Revenue Management Muscles - Demand-Based Pricing & Scaling the House.