Abstract
The application of dynamic price and its modeling was an authentic revolution for the traditional concept of price setting in business environment. The article reviews the essence and the main principles of dynamic price as a bargaining basis. Dynamic price fluctuation range in this paper is collated with the zone of agreement and introduced as an overlap between the maximum purchase price that the buyer is willing to pay and the minimum sell price that the seller is willing to accept. Therefore, the aim of this paper is to analyse the dynamic price as the bargaining basis, research problems, and to assess the dynamic price efficiency based on the dynamic price setting model experiment results. The experimental results suggest that dynamic price is a successful tacit bargaining practice.
Highlights
In the research literature and organizations’ practice, more and more attention is paid to the price setting based on current product demand and supply conditions – a dynamic price and its modelling
Appropriate price setting still remains a very challenging task requiring the organization’s knowledge of their operating costs, and of the possibility to understand the dynamic price based on the product demand and supply parameters
Research on dynamic price modelling has been undertaken by economists and operational researchers from a range of perspectives, and the benefits of dynamic price methods have long been known in airlines, electricity, and other industries
Summary
In the research literature and organizations’ practice, more and more attention is paid to the price setting based on current product demand and supply conditions – a dynamic price and its modelling. Appropriate price setting still remains a very challenging task requiring the organization’s knowledge of their operating costs, and of the possibility to understand the dynamic price based on the product demand and supply parameters. There has been an increasing adoption of dynamic price in the retail sector when selling a fixed inventory over a finite selling horizon. Due to the development of information technologies and e-commerce, many-sided information about the customer has become easier available and has determined an increased interest to the dynamic price setting research and its application in various sectors of services and industries.
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