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Free Example of The Difference between Fixed and Dynamic Pricing Essay

The two following types of pricing, dynamic and fixed, belong to the basic pricing strategies and are quite popular, each one in its own way. Fixed pricing is popular in retail, mostly in western society, as people in the Far East an Asia are very prone to bargaining. Dynamic pricing is used to gain an advantage in the market competition and to optimize expenses.

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Dynamic pricing is also known as time-based pricing. The price per product or service is varied by the hour of the day or the season. An example of a change in pricing by the hour can be electricity charges. It depends on the time of the day you are using the power, how much you will pay for it. A good example of seasonal dynamic pricing would be any tourist location at the peak season. When the mass arrival of tourists starts, prices go up. Since it is the desired location for their visit, they have no choice but to pay for the goods and services at the prices that are being requested at the moment.

Fixed pricing is easy to understand as the term is pretty self-explanatory. If the pricing is fixed, there is no room for bargaining or price negotiations. Price remains the same regardless of the time spent or the resources used to deliver certain good or services. Another example; government can fix prices for certain gods or services, and they cannot be exceeded by the party that provides them. However, fixed pricing can take up fairly big amount of time when setting prices for every product in the store; however, it will save the time during the actual shopping process for customers.

Any of these pricing tactics can work for your advantage, as well as it can work against you. So, it is necessary in the aspect of the economy to make the right choice and to choose the pricing that will suit you in the long run.

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