Dynamic pricing pros and cons10/2/2023 Technically, this is the same as " price discrimination," a tactic that was declared illegal under the Robinson-Patman Act of 1936.įortunately, the Robinson-Patman Act has more holes than a wheel of Swiss cheese and that makes any legal basis for a price discrimination lawsuit rather ambiguous, particularly in the case of non-commodity goods sold online. Simple huh? In practice, retailers can adjust their prices whenever they want to capitalize on a changing market. Simply put it’s a pricing strategy that utilizes variable prices instead of fixed ones. Though he agrees the price can increase, Narayana says, “I am able to absorb this gradual price movement, as compared to the earlier system, when the rates are significantly affected either way.” His statement echoes the position of many other motorists, who reasoned that the shock produced by fortnightly revisions was at times difficult to (function() ) A dynamic pricing definition would be “a strategy that uses variable prices instead of fixed ones, selling the same product at different prices to different groups of people”. “This explains the non-reduction of prices, when the international crude prices dropped by more than half in recent past,” he said.įor 37-year-old S Narayana, a sales executive, the new system of price revision is a welcome move. Vivek Jain, associate director, Large Corporates, India Ratings & Research, says retail selling prices in the country depend on various other factors such as excises and local taxes. The dynamic fuel prices, aimed at bringing the Indian system on par with global practices, seeks to reflect the fall or rise in international oil prices.īut how much of its benefit is passed on to end-users?Įxperts are keen to point out that it is difficult to co-relate the international prices and retail selling price. Without the necessary infrastructure, dynamic fuel pricing won’t be possible,” Ali said. Only around 20 per cent of bunks are properly automated. This then requires extra human resource, familiar with computer, to be at hand to manually feed the prices, Ali added. Without automation, fuel stocks cannot be properly monitored, and prices can not be changed daily at 6 am. At present, there are around 4650 fuel stations in the State, of which a majority are not automated. In addition, there is another major challenge faced by the bunk owners. “We are currently meeting bunk owners to decide the next course of action,” he said. Speaking to Express, Haider Ali, general secretary of TN Petroleum Dealers Association, said there needs to be a sort of price protectionism, as they operate on a very less profit margin. The losses are on account of maintaining a minimum stock, purchased at higher cost, even as the price is currently going down. On the other hand, bunk owners, in particular those dealing in huge volumes, claim they are sustaining losses running to the tune of a few lakhs. Though he agrees the price can increase, Narayana says, “I am able to absorb this gradual price movement, as compared to the earlier system, when the rates are significantly affected either way.” His statement echoes the position of many other motorists, who reasoned that the shock produced by fortnightly revisions was at times difficult to handle. However, both are sure to reverse their positions when the price does go up.įor 37-year-old S Narayana, a sales executive, the new system of price revision is a welcome move. The declining fuel price, which is now a rupee cheaper than what it was a week ago, has delighted the public, even as bunk owners, faced with losses, are contemplating contingency measures. During the period since, the retail price of petrol has come down for five days straight, barring Wednesday when the previous rate was maintained. CHENNAI: On June 16, the dynamic fuel pricing system, wherein prices are revised depending on daily market conditions, came into effect.
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