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An introduction to e-commerce and distributed applications
An introduction to e-commerce and distributed applications

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6.2.11 Dynamic pricing

The dynamic pricing model is one which has a number of different instantiations. Basically, such models treat the price of a product or service (primarily a product) as variable and open to negotiation.

The name-your-price instantiation of this model is where the customer of a site offers the price that he or she thinks is reasonable for a product or service. The administrator of the website will pass on this bid to the provider of the product or service who will decide whether to accept it.

The comparison pricing sub-model encompasses websites which provide an interface to e-shops that sell a specific product. The model provides the facility for the customer to interrogate a database of product catalogues to look for the cheapest price for a particular product such as book or a CD.

The demand sensitive pricing sub-model is based on the fact that suppliers of a product will lower the price of a product if a number of units of that product are included in a single sale. websites which employ this model provide facilities whereby consumers can notify each other of their interest in buying a particular product such as a freezer. The site keeps a database of current products that have attracted a number of buyers with a predicted price and allow users to join the database of buyers who are committed to a sale.

The bartering sub-model allows consumers to barter services or products for other services or products. A site devoted to this form of economic activity will keep a structured database of items for sale and allows a buyer to barter with a seller.