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Dynamic Pricing

Detailed description of dynamic pricing, how A.A. uses dynamic pricing and the benefits and drawbacks of dynamic pricing.

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Dynamic pricing can be defined as revenue or yield management and is a set of price strategies intended for increasing earnings. Dynamic pricing is most functional when two or more product characteristics subsist (Perloff, 2007). For example, first the product will have to have an expiration timeframe like hotel rooms and airline tickets, and then the capacity can be predetermined and augmented in advance with a moderately elevated marginal cost attached. This creates movement in the opportunity cost, as each item must be sold before its expiration date. Therefore, forecasting the value of an unexpired item as well as its existing capacity characterizes the essence of dynamic pricing (Perloff, 2007).

Dynamic pricing is generally utilized by the airline industry with their multifaceted construction of fares as well as a restricted quantity of class seating structure. The most advantageous dynamic pricing was ...

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Dynamic pricing is most functional when two or more product characteristics subsist. For example, first the product will have to have an expiration timeframe like hotel rooms and airline tickets, and then the capacity can be predetermined and augmented in advance with a moderately elevated marginal cost attached. This creates......includes three references in APA format.

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