How will dynamic pricing affect the key stakeholder issues?

What are the main issues slowing adoption of completely individualized pricing?

• As more data about each person's preferences, financial capabilities and level of impulsiveness is able to be used, what obstacles remain that hamper the implementation of completely individualized offers and pricing?

• Answer:

  In 2005, Coca Cola create a machine that charged you more for a Coke on a hot day. Presumably customers should be willing to pay more for cold refreshing drink on a hot day vs the very cold day when demand is lower. But people felt that Coke was gouging them. http://pragmaticpricing.com/2010/05/15/cokes-segmentation-error/ In 2000, Amazon did something similar online. They offered a lower price for new users than than for existing users for the same book.  It ended up being a PR issue for them. http://books.google.com/books?id=8PSXBM2Z7cUC&lpg=PT49&ots=Hoqs5FIP94&dq=different+prices+for+coke+on+hot+day&pg=PT48#v=onepage&q&f=false - great chapter on price discrimination from the book Secrets of a Money Lab.  Those two examples highlight a few of the challenges: User perception of fairness - Many industries have lower "introductory" pricing (e.g. magazines, newspapers, cable companies) to lure new customers and we do not think twice about it. But poorly designed pricing schemes makes it obvious to users someone else is getting a better deal (see Amazon example above).  With new tools for price comparison and transparency online, the appearance of fairness becomes harder to maintain. Complexity - A company that creates individual offers needs to be able to support them from beginning to end. It is not just a matter of listing a price and making a sale.  Your customer service people need to know what to say if someone calls. Your site needs to show the right amount for that user. Mistakes will violate your buyer's perception of fairness. User Frustration - In an ideal world, a buyer would tell you what they want to pay, and you would decide whether it was worth it to sell it at that price. Haggling is a type of price discrimination where the buyer and seller settle on the optimal price. But it can also be a hassle for your buyers. eBay is a great example of this.  Bidding is a great way to get the maximum price assuming a pretty liquid market. But it takes time. Someone needs to bid, wait, rebid, wait some more, and ultimately may not end up with the item.  For unique goods this works well, but not for everyday goods.  The uncertainty in pricing will drive some buyers to do a ton of research to make sure they are getting the best price, and in the end, turn them off from making the purchase altogether. Price discrimination is already here in various forms: Airline prices - Seat prices vary as do add-ons like checked bags, aisle seats, first and economy class, Credit cards - Different APRs, cashbacks, credit lines, bonus points for different behaviors Rebates - Only motivated individuals redeem rebates, which is a form of price discrimination Coupons - Targeted coupons for certain customers only. Unique access to "deals".