It's all about haggling. A number of years ago I
traveled in the Middle East, and one of the
striking differences from western culture was the
fluidity of price--even the cost of a bus ticket in
I remember walking the streets of the old part
of Jerusalem where it was just expected that the
price of every item in the little open-air shops
was negotiable. "I'll offer you 20 pounds for that
jacket," I'd say, and the vendor would reply, "My
mother would shoot me if I sold it for that price."
But eventually he'd come down.
Apparently, it wasn't until the last century
(you know, the 20th century) that prices became
fixed. I read that the rise of mail order catalogs
and selling at a distance resulted in the ubiquity
of fixed prices. Now we are rapidly moving back to
a model of fluid pricing, in which the cost of
goods fluctuates minute by minute as thousands of
people flock to that great bazaar we call the
It's sometimes called "dynamic pricing," and
it's giving rise to a mind-boggling array of new
approaches to buying and selling. Perhaps the
auction sites were among the first instances of
dynamic pricing, with eBay
continuing to be a leader in this area.
The highly popular Priceline
was also an early instance of dynamic pricing,
allowing people to get low airfares. The concept is
simple: people name a price they're willing to pay
for a ticket and when they want to travel, and then
the airlines that have unsold seats on particular
flights decide if they want to meet the person's
price. Priceline has now expanded to other
products, including hotel rooms, new cars,
mortgages, even groceries.
I've seen recently that Priceline is also
starting a flea market that will allow the buyers
and sellers to haggle over price, but when I went
to look for it in preparation to write this column
I couldn't find it. Expect to find it soon, if not
on Priceline then somewhere else.
one of the most interesting newcomers to the great
Internet bazaar. The site refers to their approach
as an "upside down auction." If you have something
in mind that you want to buy, you place a listing.
Then dealers and other individuals submit offers to
you. As sellers compete for your business, the
price goes down. eWanted currently hosts over 1,000
categories of products and services. Sellers are
also attracted to the site because it gives them a
direct, targeted audience.
Another fairly new entry is OutletZoo,
which handles closeout items. The site lists the
number of available units of a particular item and
the current price. At specified intervals the price
goes lower, until every item is finally sold. As a
buyer, you have to decide when to jump in. If you
wait too long, the items might be sold out by the
time you make your purchase. Or if you buy to soon,
you may not get the lowest price. OutletZoo offers
a wide range of computer items, but is also
gradually expanding into areas such as consumer
electronics, toys, tools, and items for the
A number of sites use the Internet as a way of
grouping together those who want to buy a
particular product, resulting in volume discounts.
as more people submit their intention to buy a
particular item, the price goes lower. On a
particular date the deal closes, and all those
participating then make their purchase. Those who
are buying often promote the product to their
friends or on the Internet in order to get a larger
group--and an even lower price.
As commerce on the Internet bazaar continues to
heat up, you'll no doubt encounter many more such
novel schemes of dynamic pricing, where the only
constant is flux.
© 2000 by Jim Karpen, Ph.D.