1.0 What is pricing?

There are many definition of price:

A value that will purchase a definite quantity, weight, or other measure of
a good or service. In commerce, price is determined by what (1) a buyer is
willing to pay, (2) a seller is willing to accept, and (3) the competition is
allowing to be charged.
In its simplest term pricing can be regarded as the cost for a product or
service used by the customers. Price is one of the components of the
marketing-mix – Price, Place, Promotion, Product.
In the past, bargaining played a major role in setting prices. In many parts of
the world bargaining is still practiced. “Single price” policy is a relatively new
phenomenon. It is a product of the latter half of the century. Single price
system came into practice purely for convenience sake. Many of the large
scale retailing companies began offering numerous products and
they employed workers in the thousands. In such a situation, bargaining was
not a feasible alternative. This led to the popularity of single price policy.
Today, like the olden days, differential pricing is quickly catching up largely
due to technological capabilities that makes it easy to monitor track, and
offer customized services to thousands of customers at a very low cost.
For example, E-Commerce has fundamentally changed the rules of
marketing and pricing and enabling both sellers and buyers to discriminate
against one another.
Buyers Sellers
Have instant access to thousands of sellers and they can perform instant price
comparison. ‘Bots’ are intelligent agents (software) capable of performing price
comparisons across thousands of vendors. Specialized portals such as
CompareBazar.com allow buyers individual an corporate – to quickly perform price
comparison across thousands of product categories.
Can name their price and have sellers meet it. For example, sites like
Priceline.com enable buyers to quote prices for airline seats, hotels, car rentals
etc. Interested sellers will then contact the buyer.
Can monitor customer behavior and tailor offers to individuals. What was
previously impossible for vendors to perform can today be performed in a matter
of minutes enabling vendors to offer custom prices to various groups of
customers.
Can give certain customers access to special prices. Technological capabilities now
can easily enable sellers to practice discriminate pricing. It also enables sellers to
adjust their pricing based on real time demand and
inventory levels.
Can obtain free products. For example, the open source movement provides
freeware for PCs, smart phones, tablets, etc. It puts added pressure on software
sellers and erodes their margins.