1 Response 2 Db /Dynamic Pricing Unit Week 2

1 response 2 Db /Dynamic pricing unit week 2

Each post should be one paragraph in length (75 words) and must be substantive in nature Do not simply state that it is a good or bad idea, specify why and be detailed in your explanation. Aside from assisting a classmate, the goal is to demonstrate your mastery of the concepts.

1 response 75 words

2 response 75 words

DYNAMIC PRICING

Dynamic Pricing

Pedro Amado Flores Jr.

American InterContinental University

Unit 2 Assignment 2 DB WK 1

BUS610 - Economics for the Global Manager

It is also important to keep in mind that when this particular strategy is utilized properly, an organization can analyze the data in order to see the efficiency that the strategy has by analyzing price discrimination practices. This particular method can also help an organization in order to see the potential increase in profits of a firm by enabling the firm to capture more consumer surplus as well. However, it is also important to keep in mind that ethical issues can arise when using this particular strategy because this particular method can allow an organization the capability of charging prices based on consumer history and profiling. This can potentially harm an organization’s success because their potential and current consumer base will see it as a form of invasion of privacy.

How does the company you have chosen use dynamic pricing?

The company that I have chosen for this particular assignment is the Glendale Department of Water and Power. The Glendale Department Water and Power utilizes dynamic pricing by utilizing a time based pricing method. I believe that the DWP’s use of time based pricing can be seen as a popular method in the electricity industry and it can also be considered as a perfect example of dynamic pricing as well. I also believe that it is important to keep in mind that GWP’S dynamic pricing allows the organization to change the price on their electricity service as often as hourly and in many cases even more often. I also believe that this particular method allows the GPW to raise their respective prices during peak hours and during certain days of the year as well. Although this particular method is considered to be a form of dynamic pricing, it is not considered the most controversial form of dynamic pricing (Glendale Water and Power, 2013).

What are the benefits and drawbacks of dynamic pricing for that particular company?

The benefits of dynamic pricing for the GWP are that the organization is able to control the demand that their respective consumers are requesting. The GWP is also able to control how much their electricity service costs throughout the course of the day. Another benefit that the GWP gains by utilizing the dynamic pricing approach is that they are able to raise their respective prices at a moment’s notice and they will be able to dictate how much their respective consumer base will pay for their respective service as well.

The potential drawbacks of utilizing dynamic pricing are that GWP will be offering their electricity consumers shifting prices. Another drawback is that their pricing approach will differ from standard flat-rate pricing and time-of-use pricing as well. Another potential drawback is that during peak hours, peak pricing will be implemented on a day-to-day basis in order to address peak demand conditions specific to that particular day. I firmly believe that these potential drawbacks have the potential to annoy many of GWP’s consumers because they will not be able to know what day or during what time the cost of electricity will rise.

Summarize Findings

As I was concluding my findings, I came to the realization that dynamic pricing has its pros and its cons. However, I believe that dynamic pricing does benefit an organization more than their respective consumers. I believe that dynamic pricing approach allows a company to remain profitable and successful by making strategic decisions in regards to the amount of money that is being charged to their respective consumer base. I also believe that this particular approach places consumers on the other side of the spectrum because this particular approach has the potential to alienate consumers to a certain extent. I also believe that consumers aren’t able to dictate what they are willing or able to spend for such a service and they aren’t able to dictate the demand for the service as well.

Works Cited

Dhebar, A., & Oren, S. S. (1986, may). DYNAMIC NONLINEAR PRICING IN NETWORKS WITH INTERDEPENDENT DEMAND.Operations Research;, pp. 384-395.

Glendale Water and Power.(2013). Glendale Water and Power. Retrieved May 14, 2013, from Glendale Water and Power Web Site:

#2 posts

Mia LaChelleStrozier

American InterContinental University

Dr. Grace

Unit 2-D/B – Dynamic Pricing for NBA Teams

May 14, 2013

Dynamic Pricing

Dynamic pricing is known as 3rd degree price discrimination. It is also considered time based pricing. Dynamic pricing takes place when the consumer is separated into to 2 groups or more, with individual demand curves, and separate rates are charged for each set of customers. A company can enhance their profits when applying price discrimination in a successful way. Dynamic pricing is a way for the supplier to secure the surplus of the consumer. Consumer surplus basically denotes the distinction between what the customer is prepared to pay for services or goods and the amount the customer actually has to pay for the service or goods (Fitzsimmons, 2013).

NBA Teams and Playoff Tickets

The use of dynamic pricing has become a trendy option for the NBA teams as it has been implemented in several team’s strategy as an innovative tactic to drive their revenue up. In 2010, several of the NBA teams turned to dynamic pricing tactics in an attempt to assist the teams with moving tickets that were hard to sell. Using the dynamic pricing allowed the teams to make the tickets more desirable for the buyers through lowering the prices.

Advantages

The advantage of dynamic pricing for the NBA teams is that it allows the teams to have an innovative approach to drive their revenue up for the sale of tickets. It can definitely assist them selling tickets that otherwise would be hard to move items. Dynamic pricing can allow the NBA teams to profit from the games that are considered the most popular in the eyes of the consumer. For example, a game that everyone would like to see is when the Miami Heat plays the Lakers. The consumer is willing to pay to see these two teams because of the stars on the team such as LaBron James, Dwayne Wade and Kobe Bryant. The dynamic pricing method allows the NBA teams to let the ticket purchaser’s demand for a specific game impel the pricing of that game (Henegan, 2010).

Disadvantages

The only disadvantage that was reported to dynamic pricing was recently by an article in Forbes magazine. It was reported that some fans may become deterredordejected to buy the tickets to the more expensive games (Rishe, 2013).

Summary

In closing, dynamic pricing emboldens aficionadas by affording them additional choices throughout the course of the purchasing process. Dynamic pricing also offers the aficionadas the opportunity to have ticket prices that “better reflect actual market value” (Rishe, 2013). The consumer that buys their tickets the earliest will most likely be the ones that gets the better value. Offering the fans a reduced price for games that otherwise would have not sold the tickets from the start also is a value for the NBA teams as they reaped some money for the tickets opposed to not selling them at all. Finally, through using the dynamic pricing approach, it was reported that the NBA teams announced a 6% increase in their gate revenue for their average per-game. This increase through using dynamic pricing approach also surpassed the set record that took place in 2012 which was a shortened season due to the lockout (Rishe, 2013).

References:

Fitzsimmons, C. (2013). What Is Dynamic Pricing? Retrieved from What Is Dynamic Pricing? - eHow: › … › Employee Compensation & Benefits › Calculate Pay

Henegan, J. (2010, September 24). NBA teams increasingly embrace dynamic pricing for ticket sales. Retrieved from NBA teams increasingly embrace dynamic pricing for ticket sales....:

Rishe, P. (2013, May 8). NBA Slam Dunks Gate Revenue Record Thanks to Variable/Dynamic Ticket Pricing. Retrieved from NBA Slam Dunks Gate Revenue Record Thanks to Variable/Dynamic Ticket Pricing: bing.com/news/NBA Slam Dunks Gate Revenue Record Thanks to Variable/Dynamic Ticket Pricing