Dynamic Pricing Best for Retailers, but may Upset Consumers

A recent University of Pennsylvania study found that 64% of respondents who had recently used the Internet did not know that it is legal “for an online store to charge different people different prices at the same time of day.” Research shows that people often get upset if they learn that they paid more than someone else, possibly because they do not know much about what goes into a company’s decisions to set prices. On the flip side, Wharton Professor Peter Feder says that companies that benefit most from dynamic pricing are those that experiment with different pricing strategies, trying out lower and higher prices to different customers, and utilizing coupons, discounts and other incentives to maximize the customers’ shopping experience, and their own profits.