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Smart Pricing: How Google, Priceline, and Leading Businesses Use Pricing Innovation for Profitability by Z. John Zhang, Jagmohan Raju

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5. The Automatic Markdown

“[R]etail prices are finally determined by the incomes of the masses of buyers...this is the dominating power in fixing prices.”Edward A. Filene, 1927, founder of Filene’s Basement

Everyone knows clothing stores mark up their prices, often by a lot. Clothes are usually priced from 100% to as much as 500% above wholesale. Stores typically offer their customers occasional reprieves throughout the year by running some products on sale, but in every case, the customer is at the mercy of the merchant. By design, shoppers can never know when a product they like will be on sale. Their only choice is either to pay the price they see on the day they are shopping or to move on. And the more in-demand the item is, the more money ...

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