FOR IMMEDIATE RELEASE
July 21, 2000
Dynamic Pricing Has Arrived
SiteSell.com is First on Net to Price Dynamically Say Good-Bye to the Fixed Price.
"The fixed price will be seen to be a brief blip in the history of business." Or so says Dr. Ken Evoy, CEO of SiteSell.com, a provider of creative solutions for e-commerce companies.
What's a "fixed price," you ask? It's how most products are priced today. Merchants set a price and they don't change it. For example...
That golf shirt at Wal-Mart was $29.99 last week, is $29.99 today, and will be the same price until it goes on sale... which is really just a new fixed price. And it will be the same price at every single Wal-Mart store, from Miami to Seattle.
For thousands of years, pricing was dynamic. Market vendors would see competing vendors' prices for potatoes and balance that against buyer demand, and constantly adjust their prices accordingly. This was a very raw, low-tech kind of dynamic pricing.
The Industrial Revolution changed all that. Mass marketing simply did not allow for any kind of dynamic pricing. Fixed pricing worked because it was simply the most efficient way to handle matters, given the technology at the time.
Shopping bots roam the Net, constantly looking for the lowest prices. Communication is instantaneous and free. Competing merchants can, once again peek into competitors' prices, not just in the next stall at the market but around the world, with the click of a mouse. Supply and demand ebbs and flows.
And it can all be measured in real-time. So Dr. Evoy goes on to add...
"A far more efficient way to sell, for both merchant and vendor, is through dynamic pricing. With dynamic pricing, the price of a product behaves more like the price of a stock on a stock exchange... adjusting constantly, on a second-to-second basis, a perfect reflection of market conditions at any given moment."
The result? More customers buy more product at a price that makes the most sense to them. SiteSell.com has developed its own technology to price products dynamically. It launched that server-side software today on one of its own products, fittingly enough on a product that helps merchants perform pricing surveys, called "Make Your Price Sell!."
Make Your Price Sell! (MYPS!) is the first product on the Net to be fully dynamically priced. Here's how dynamic pricing works...
1) The Price Drop
The price of MYPS! is continuously dropping. If no sales occurred for a day or two, SiteSell.com would literally be giving it away!
2) The Price Increase
Every time a sale occurs, the price increases by a small amount, spread over 30 minutes. So, depending on whether there's been orders in the last 30 minutes, the price might be ticking UP or DOWN on the Order Page.
Here's what this means...
Customers vary in price-sensitivity. Some are cautious penny-pinchers. Others feel that "price is no object" when they find a product that they need. Most are somewhere in between.
So as the price of MYPS! drops, people start buying... the buying pressure increases as the price decreases. But when people buy, the price starts going up. Net result?
The price that a customer sees on the Order Page is a perfect reflection, at that moment, of the balance between the buying pressure from visitors to the site and the selling pressure of the continuously dropping price.
3) Two Ways to Buy
Just like in a stock market, a customer may purchase MYPS! "at the market price" (i.e., at the current price ticking on the Order Page). Or a customer may submit a bid below the current selling price.
The bidding page provides participants (yes, buying becomes more participatory) with a price history graph. It also shows them the high, low, and average price for the week, as well as the most recent sale price.
If the price of MYPS! drops to the level of a bid, that order is filled.
What does it all mean?
Customers receive MYPS! at a price that makes the most sense to them. Dynamic pricing is never hype-driven, "rip-off" pricing.
Merchants will sell more product to more customers, and be able to automatically adjust to the incredible and complex pressures of the Internet.