1) Executive Summary

This research paper will investigate the benefits of dynamic and fixed pricing and how the different pricing methods are perceived by consumers in the online market. It will examine consumer perceptions and behavior when purchasing various goods and services in an online environment. As well as the trends of increasing dynamic pricing methods on various websites even for goods and services sold at posted prices.

2) Introduction

The pricing issue we have chosen to investigate is that of dynamic vs. fixed pricing of products and services on the internet. Prior to the introduction of e-commerce, products and services were distributed through brick-and-mortar stores with fixed prices. However, many online websites are now offering variable pricing methods for the exact same products. Consumers are now able to have much more control over the prices of these online goods and services.

With a typical brick-and-mortar store or online store, the price is set by suppliers to meet the average consumers’ willingness to pay, in order to maximize profit. One of the main advantages associated with a set retail price is reliability. Consumers can make a decision to purchase the product at the current price, and they have a sense of security that the product will be available at the set price. With the introduction of e-commerce suppliers are now able to sell their products to much larger markets across the world and are no longer restricted by geographical limitations. This creates a greater price competition and allows consumers access to certain goods and services that may not have been available to the previously E-commerce and dynamic pricing provides the consumer with a greater sense of power and control to set their own price, on an individual basis. Prime examples of this scenario, is the online auction house Ebay.com. Where consumers