Review

Week 9

1. How does ebay price their service? Is it an effective method of pricing?

Ebay allow buyers to determine what they would pay for an item.

Besides, Ebay had evolved to also offer a fixed-price “buy it now” option to those who don’t want to wait for an auction and willing to pay the seller’s price. Sellers can also use the fixed price format with a “best offer” option that allows the seller to counteroffer, reject or accept an offer.

Ebay earned revenue by collecting fees: an insertion fee for each listing plus a final value fee based on the auction or fixed price.

It is effective because it’s pleases both sides of consumers and buyers. Customers gain control and receive the best possible price while seller make good margins due to the site’s efficiency and wide reach.

Ebay also did two things well to improve people’s trust to stranger.

First, it worked hard to make their Web site a community, and they developed tools to help reinforce trust between strangers. Second, The company tracks and publishes the reputations of both buyers and sellers on the basis of feedback from each transaction.

2. Do we price products and services in different ways?

We price products and services based on several pricing methods.

Markup Pricing is an elementary pricing method. It ignores current demand perceived value and competition. Many people feel that cost-plus pricing is fairer to both buyers and sellers.

Perceived value pricing is made up of several characteristics: buyer’s image of product performance, channel deliverables, the warranty quality, customer support, supplier’s reputation, trustworthiness and esteem.

Value pricing is reengineering and used by low-cost producer without sacrificing quality.

High-low pricing is retailer charges high prices on an everyday basis but then runs frequent promotions.