Abstract and Keywords
Customized pricing is most common in business-to-business settings, although it is also found in consumer lending and insurance. It is defined by three characteristics: customers approach a seller; the seller must decide how to respond to each customer request; and the seller has some freedom to quote different prices for different customer requests based on the products in the request, the sales channel through which the request is received, and the characteristics of the buyer. This article describes how customized pricing works in a number of different market settings. It further describes how to determine the customized prices that best meet corporate goals given a bid-response function, as well as how to estimate a bid-response function given historical sales data.
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