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Other Issues: Auction Pricing

One pricing approach that does not fit neatly into the price setting process we’ve described is the auction pricing model. Auction pricing is the reverse of bid pricing, which we discussed earlier, since it is the buyer who in large part sets the final price. This pricing method has been around for hundreds of years, but today it is most well known for its use in the auction marketplace business models such as eBay and business-to-business marketplaces. While marketers selling through auctions do not have control over final price, it is possible to control the minimum price by establishing a price floor or reserve price. In this way the product is only sold if someone’s bid is at least equal to the floor price.

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