Vipul: /* =Expository book references */

2009-03-21T20:16:05Z

=Expository book references

← Older revision		Revision as of 20:16, 21 March 2009
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	* {{paperlink\|TellisPricing}}		* {{paperlink\|TellisPricing}}

	===Expository book references==		===Expository book references===

	* {{booklink\|UndercoverEconomist}}, Page 46-47 (section title: ''Mix it up!'')		* {{booklink\|UndercoverEconomist}}, Page 46-47 (section title: ''Mix it up!'')

Vipul: Created page with '==Definition== '''Random discounting''', also called '''variable merchandise pricing''', is a strategy whereby a seller maintains a somewhat high price most of the time, discoun...'

2009-03-21T20:15:09Z

Created page with '==Definition== '''Random discounting''', also called '''variable merchandise pricing''', is a strategy whereby a seller maintains a somewhat high price most of the time, discoun...'

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==Definition==

'''Random discounting''', also called '''variable merchandise pricing''', is a strategy whereby a seller maintains a somewhat high price most of the time, discounting it significantly in a manner that is not easy to predict. This is different from a strategy of [[periodic discounting]], where the pattern of price variation is easy for all buyers to see and adjust to.

==Motivation behind random discounting==

===Random discounting as price discrimination: for profit===

Random discounting is a form of [[price discrimination]], more specifically [[third-degree price discrimination]]. The motivation is that:

* The less price-sensitive customers, who are unwilling to do extensive hunting for good deals, are likely to purchase the products at a time when the price is at its usual high level.
* The more price-sensitive customers, who are likely to spend a lot of time hunting for good deals, are likely to purchase the product at a time when the price is low. By having the low prices substantially lower, the seller seeks to attract these customers away from the competition.

Sellers are able to increase profits because price-sensitive customers generally search too much for good deals (in other words, their [[search cost]]s, in terms of the opportunity cost of the time spent, is usually less than the money they save) while price-insensitive customers often spend too little time searching for good deals. Thus, sellers can maintain low prices for a very short fraction of the time and still attract most of the highly price-sensitive customers while keeping in the insensitive ones away.

==Alternatives to apparent random discounting==

===Periodic discounting===

{{further|[[Periodic discounting]]}}

In some cases, what appears to be random discounting
==References==

===Journal references===

* {{paperlink|TellisPricing}}

===Expository book references==

* {{booklink|UndercoverEconomist}}, Page 46-47 (section title: ''Mix it up!'')

Random discounting - Revision history

Vipul: /* =Expository book references */

Vipul: Created page with '==Definition== '''Random discounting''', also called '''variable merchandise pricing''', is a strategy whereby a seller maintains a somewhat high price most of the time, discoun...'