The concept of fixed costs is a relatively recent phenomenon. Centuries ago, prices of goods were negotiated face-to-face between a buyer and a seller. Uniform prices were born at the same time as railroads and canal systems, which allowed for wider distribution of products. But pricing is on the verge of a new revolution. Given market circumstances and economic factors, marketers of the future will offer special personalized deals, with prices calculated in real time for every purchase.

The first signs of this new fluid pricing can be found mainly on the Web. Online auctions allow cybershoppers to bid on various types of good. However, the pricing revolution goes beyond e-Bay. Based on data from The Curve Report, the majority of shoppers are fed up with fixed prices in retail, brick-and-mortar stores included. As many as 76 percent of 18- to 49-year-olds are interested in trying a new flexible pricing model, and two-thirds say they prefer pricing that is flexible (66 percent) over pricing that is fixed. Shifting to a more flexible model could provide opportunity to open up new markets, change purchase patterns, and unveil a whole new set of purchasing behaviors among consumers.

FIXED PRICES TO MAKE THEIR EXIT?

Bargain shoppers are at the forefront of the pricing revolution, prioritizing price rather than convenience. It suggests that quite a few consumers would be willing to modify their shopping style and brand loyalties for the sake of real-time personal pricing. Contemporary buyers can quickly and easily compare products and prices, which puts them in a better bargaining position. At the same time, the technology allows sellers to collect detailed data about customers' buying habits and preferences. Consequently, they can tailor their products and prices, which prepares ground for a more efficient marketplace.

FOOD MARTS TO OFFER PERSONALIZED DEALS

Some supermarkets already try to embrace the new trend in pricing. Two giants Safeway and Kroger offer the opportunity to determine individualized prices for their customers. The system works by analyzing a shopper’s previous purchases, and leveraging that data into insights about what they might purchase in the future. Example: if a shopper makes purchases that might indicate they are part of a large family, the supermarket could offer targeted discounts on bulk food items, or give discounts only on that customer’s preferred brands. By creating specific prices and offers based on shoppers’ habits, the grocery store has a way to improve on their thin profit-margins, at the same time offering deals to the customer only on the items they are specifically interested in purchasing.

CAPTURE, SHARE AND GET A DISCOUNT

Brand can use flexible pricing as way to engage consumers in a number of imaginative ways. A new application Kapture rewards users for taking snapshots of ‘moments’ and sharing them on social networks. The free iPhone app lets brands and businesses leverage anyone taking a photo as a brand ambassador by offering instant rewards, including discounts and physical goods. These can either be redeemed instantly, saved for a later date, or given as gifts to friends. Kapture has signed up more than 300 merchants in New York City, and allows brands to connect with their consumers and benefit from the millions of photos already taken and shared monthly via social media.

SMART VENDING MACHINES MAY CHANGE PRICE ON THE FLY

Flexible pricing models can also be applied in more humorous, yet effective ways. Spanish marketing agency Momentum recently installed 18 vending machines for Coca-Cola’s lemonade drink Limon&Nada that offer discounts when the temperature rises. At ambient temperatures of up to 77 degrees, the cans of lemonade cost 2 euros. At 78-84 degrees, they are around 30 percent cheaper at 1.40 euros, and when the temperature reaches 85 degrees and above, they are half price at just 1 euro. This creative method of pricing lasts through the summer months, and offers yet another way to think about pricing products based on demand.

Sources: http://www.psfk.com; http://www.businessweek.com