Applications of flexible pricing in business-to-business electronic commerce. IBM Syst J

IBM Research Division, Thomas J. Watson Research Center, P.O. Box 218, Yorktown Heights, New York 10598, USA
Ibm Systems Journal (Impact Factor: 1.79). 02/2002; 41(2):287 - 302. DOI: 10.1147/sj.412.0287
Source: IEEE Xplore

ABSTRACT The increasingly dynamic nature of business-to-business electronic commerce has produced a recent shift away from fixed pricing and toward flexible pricing. Flexible pricing, as defined here, includes both differential pricing, in which different buyers may receive different prices based on expected valuations, and dynamic-pricing mechanisms, such as auctions, where prices and conditions are based on bids by market participants. In this paper we survey ongoing work in flexible pricing in the context of the supply chain, including revenue management, procurement, and supply-chain coordination. We review negotiation mechanisms for procurement, including optimization approaches to the evaluation of complex, multidimensional bids. We also discuss several applications of flexible pricing on the sell side, including pricing strategies for response to requests for quotes, dynamic pricing in a reverse logistics application, and pricing in the emerging area of hosted applications services. We conclude with a discu ssion of future research directions in this rapidly growing area.

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    • "These approaches have been illustrated through a hypothetical case study, which has a very strong resemblance to an actual business problem of pricing IaaS for a specific engagement. Global Journal of Flexible Systems Management This proposed hybrid methodology would also address the need of flexibility literature in pricing schemas, while addressing the requirements surrounding greater customer participation and orientation in the business strategy formulation thereby facilitating greater openness to the customer's uniqueness of needs, deeper understanding of the variation in needs, improved accommodation of the fluctuation in needs and therefore greater relationship orientation of the organization (Sushil 1997; Bichler et al. 2002; Zhang et al. 2010). Further, the hybrid methodology also addresses the need of literature focusing on the systematic approaches to accommodate the diversity in customer's requirements rather than on the core offering while pricing such services (Sushil 2012c; Wu and Banker 2010). "
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    Global Journal of Flexible Systems Management 06/2015; 16(2). DOI:10.1007/s40171-015-0093-1
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    • "The pricing technique has a wide range of applications such as marketing (e.g. Bertsimas and Perakis, 2001; Bichler et al., 2002), supply chain management (e.g. Jia and Hu, 2011), inventory management (e.g. "
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    Transportation Research Part E Logistics and Transportation Review 05/2012; 48(3). DOI:10.1016/j.tre.2011.11.005 · 2.68 Impact Factor
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    • "Odlyzko (2001) argues that sophisticated pricing schemes in communication networks like price differentiation based on 'Quality of Service (QoS)' are likely to be substituted by simpler schemes due to the fact that the quality of services constantly increases whereas costs of the same decrease. Bichler et al. (2002) provide a review of research on flexible pricing, including both differential-pricing and dynamic-pricing mechanisms, such as auctions. In their work they conclude that successful utilization of flexible pricing in contrast to fixed pricing can significantly enhance a company's competitive advantage and help manage changing market demands, if it is integrated with real-time end-to-end supply chain management. "
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    ABSTRACT: This contribution concerns itself with the potential of Usage-Based Pricing policies for smart products. We develop an analytical model of a supplier of machines and a customer that allows us to compare Usage- Based Pricing to a traditional scheme with fixed prices, and to determine optimal solutions for both parties. Based on these findings, we discuss the value of Usage- Based Pricing on an operational as well as on a strategic level. The main conclusion that can be drawn from our research is that Usage-Based Pricing does not provide any additional value that could not also be achieved by information sharing and joint price optimization. From a more strategic perspective, however, we find that the transfer of demand risk from the customer to the supplier implied by Usage-Based Pricing might be used as a strategic tool to attract new prospects and to enter new markets, but only to a lesser extent as a means to keep existing customers.
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