Appendix A

Pricing Mechanisms

For the customer, the way the product is priced is a measure of its exchange value. If a customer believes that the product’s benefits outweigh the sacrifices and the actual price, then he or she may purchase it. People traditionally think of pricing mechanisms such as charging a premium price for a differentiated product or service, charging a discounted price to attract new customers (short term or long term), or other mechanisms such as auctions, and so forth. However, the Internet and rapidly evolving technologies have brought with them a new wave of innovative pricing mechanisms.

For many entrepreneurs, these innovative pricing mechanisms have opened up many new profit opportunities, and they have created ...

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