Posted in Marketing and Strategy Terms, Total Reads: 950
Definition: Variable Pricing
Variable pricing can be defined as a pricing strategy for products in which the price of a good or service varies depending upon the sales location, region, date or other factors. Variable pricing strategies try to adjust the product prices in order to achieve an optimal balance in between the volume of sales and the income of per unit sold based on the various characteristics of different points-of-sale categories. This strategy includes offering different prices to different customers for the same products. Even though the norm is to follow standard pricing, in case of bulk order of large quantity of goods, variable pricing can be implemented.
For example- street vendors often quote a higher price for the items sold for which the customer tries to negotiate until both of them settle for a price that they believe is fair. The customer tries to bring down the price as much as he can while the seller tries to obtain the highest return from the sale. One of the advantages of variable pricing could be that a seller may be able to sell his goods which were not in demand at a lower price thus, realizing some profits. The downside could be losing out on customers who paid a higher price for the same product which now is being offered at a lower price to others.