THE NEW DYNAMICS OF PRICING

What's the most consumers will pay? It's the billion-dollar question.

- WRITTEN BY: DAMIEN MARTIN

The value of something, at its root, is whatever someone is willing to pay for it.

There might be no better distillation of this than auctions, where the process plays out in real time as potential buyers compete to be the highest bidder. The most outrageous example might be Comedian, the conceptual art project by Maurizio Cattelan consisting of a banana duct-taped to a wall. There were actually three bananas, and crypto entrepreneur Justin Sun bought one for $6.2 million in 2024 then ate the banana onstage, For companies experimenting with dynamic, personalized pricing, the value is much more tangible. It’s about Maximizing profit by selling a product or service for the most a specific individual is willing to pay.

For decades, businesses have used generalized data to set and change pricing. Think airlines charging more for flights to the Caribbean in winter than they do in summer. They know people are tired of the cold and want to escape to someplace warm, so the airlines charge accordingly. That's generalized algorithmic pricing.