Buyer and Seller PerspectivesThe meaningof price depends on the viewpointofthebuyerandthesellerEachpartytotheexchangebringsdifferentneedsand objectives that help describe a fair priceIntheend,bothpartiesmustagreeorthereisnosale.01001010100111101000010030111010010
Buyer and Seller Perspectives • The meaning of price depends on the viewpoint of the buyer and the seller. • Each party to the exchange brings different needs and objectives that help describe a fair price. • In the end, both parties must agree or there is no sale
OverviewThe Internet ChangesPricing StrategiesBuyerandSellerPerspectivesBuyerViewSeller ViewPricing StrategiesFixed PricingDynamic PricingBartering0000OOOOOOOOOOOOOOOOOO010
Overview The Internet Changes Pricing Strategies Buyer and Seller Perspectives Buyer View Seller View Pricing Strategies Fixed Pricing Dynamic Pricing Bartering
Buyer ViewForthebuyers:values=benefits-costsThe Real CostsToday's buyermust be quite sophisticated to understand eventhesimpledollarcostofaproduct. The seller's price may ormay not include shipping,tax, and otherseeminglyhidden elements (costs revealed online atthe last screenofa shopping experience)Promotion of a newpricing scheme fora long distance telephonecompany:= Complex dealsSome carriers advertise"so.o7 a minute,period."0100101000111101000010010111010010
Buyer View • For the buyers: values = benefits – costs The Real Costs • Today’s buyer must be quite sophisticated to understand even the simple dollar cost of a product. The seller’s price may or may not include shipping, tax, and other seemingly hidden elements (costs revealed online at the last screen of a shopping experience). Promotion of a new pricing scheme for a long distance telephone company: Complex deals, Some carriers advertise “$0.07 a minute, period
1.$23.90 per month standard plan providing access to AOL and the Internet, withouthourlyfees.*2.$19.95 per month ($239.40 1 year prepaid subscription) providing access to AOL andthe Internet, without hourly fees, for members who pay in advance for 1 year. *3.s14.95permonth"bring-your-own-access"planprovidingunlimitedaccesstothousands of unique AOL features*,including access to the Internet, for individuals whoalready have an Internet connection or access through the work or school environment.4.$4.95 per month light usage plan providing 3 hours of AOL, including the Internet,with additional time priced at just $2.50 per hour*5.s9.95 per month limited usage plan providing 5 hours of AOL, including the Internet,with additional time priced at just $2.95 per hour** Pricing plans do not include premium services, which carry additional charges.These are fairly clear yet complex, and the burden is on the consumer to understand his orherneedsandtranslatethose intothebestprice.AOLISPFeeScheduleinJuly2002Source:Seewwwaol.com0717070070710
1.$23.90 per month standard plan providing access to AOL and the Internet, without hourly fees.* 2.$19.95 per month ($239.40 1 year prepaid subscription) providing access to AOL and the Internet, without hourly fees, for members who pay in advance for 1 year.* 3.$14.95 per month "bring-your-own-access " plan providing unlimited access to thousands of unique AOL features*, including access to the Internet, for individuals who already have an Internet connection or access through the work or school environment. 4.$4.95 per month light usage plan providing 3 hours of AOL, including the Internet, with additional time priced at just $2.50 per hour*. 5.$9.95 per month limited usage plan providing 5 hours of AOL, including the Internet, with additional time priced at just $2.95 per hour*. * Pricing plans do not include premium services, which carry additional charges. AOL ISP Fee Schedule in July 2002 Source: See www.aol.com These are fairly clear yet complex, and the burden is on the consumer to understand his or her needs and translate those into the best price
The Real CostsHowaboutthetime,energy,andpsychic coststhataddtoabuyer'smonetary costs?Sometimes:TheNetisslowInformationishardtofind:OthertechnologicalproblemsUsers can spend moretimeandenergy&becomefrustrated (psychic cost)1007001010100111701000010070111010010
The Real Costs • How about the time, energy, and psychic costs that add to a buyer’s monetary costs? • Sometimes: • The Net is slow, • Information is hard to find, • Other technological problems, Users can spend more time and energy & become frustrated (psychic cost)