Innovation in Pricing Mechanisms: An Analysis of the Emergence of Dynamic and Fixed Pricing in Five Countries

Karl Akbari

doi:10.6667/interface.20.2023.193

Innovation in Pricing Mechanisms: An Analysis of the Emergence of Dynamic and Fixed Pricing in Five Countries

Karl Akbari

Abstract

This study examines how two pricing innovations, fixed and dynamic pricing, became the modi operandi in pricing. We first introduce the historical context and adoption of fixed and dynamic pricing mechanisms and identify common themes and differences. In addition, the innovation patterns of the fixed and dynamic prices in five countries, Japan, Britain, France, the United States, and China, are analyzed and contextualized from a historical, biographic, and a buyer/seller perspective. The results show that fixed and dynamic pricing have continuously evolved and gained widespread acceptance as a leading pricing strategy once the appropriate platform was available (e.g., department stores for fixed pricing or a deregulated airline industry/e-commerce for dynamic pricing). The key factors contributing to the diffusion of pricing innovations: mutual benefits for buyers and sellers, competitive pressure for smaller sellers to adopt the innovative pricing mechanism, and market expansion by including less affluent customer groups, are guidelines for the success of future pricing innovations.

Keywords

fixed pricing, dynamic pricing, innovation, business history

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