ABSTRACT
Dynamic and personalized pricing emerged as novel pricing approaches in the digital age; shifting to these approaches can increase company profits by 3% to 25%. Dynamic pricing allows firms to smoothen demand and supply and to remain competitive facing price pressure. Personalized pricing enables companies to tap into consumers’ different willingness to pay. However, such profit enhancements only set in if managers make good choices when implementing their company's pricing approach. Managers need to overcome potential adverse consumer reactions and comply with privacy regulations. They need to create an appropriate IT infrastructure, synchronize prices in their on- and offline channels, harmonize prices in their product portfolio, and nurture a mindset that is open to automating prices. This chapter introduces and discusses a systematic dynamic pricing process that provides practical guidance for decision-makers. This discussion enables managers to decide whether and how to implement a dynamic pricing approach.
