Dynamic Pricing: Let your prices rise or fall until you maximize revenue (opens in new tab)

I think they're in for a shock. 5% sales conversion on random traffic to your blog? That's probably off by an order of magnitude. Random visitors aren't in shopping mode. Ask anyone who's ever got a bunch of traffic from Digg or Reddit.

You're lucky if 5% click the link to go to your sales page.

If you switch to fully dynamic pricing, then you lose control of the marketing message that's encoded in your prices.

You also risk irritating people who feel 'gamed', but that's probably not as big of a worry. People have been complaining about airline dynamic pricing since forever, but it hasn't seemed to stop people from flying.

Fun read, although I wasn't excited by the template. I prefer messy with more information.

If you do use dynamic pricing and you measure things carefully you can compute/deduce the price-demand function. It's not a straight line, as most people would intuit and that article assumes for simplicity, but the analysis in that article can be applied to non-linear systems. Dynamic pricing allows you to start that analysis.

Surely I think it is a good step forward, but there are two sides of the equation, maximizing profits and providing fair value for the price.

If the company wants to maximize profits they might just as well start with highest possible price as tybris suggested. However, price has always been related to scarcity, and if there is no control of the same, the offer gets commoditized , hence the real and perceived value is not appropriate. The book Experience Economy talks a lot about this.

EDIT: In any case, the one that is concerned with fair value has a sustainable advantage over the one that is looking for ripping off customers. Dynamic pricing should involve many variables, such as time since marketed, total sales, stock, discounting, revisions etc, but I would keep all of this information out of the sight of customers as it may appear very confusing and irritating for the conservative ones.

I am not sure whether they are doing it right here, but I have great respect for experimenting. Behind every great invention there is an exploded lab :D

Most apps start with an introductory price to boost their ranking. Then it goes up to normal and if they see that it doesn't sell anymore, they lower the price again. Or they do weekend/Holliday sales too.

I think for a user it's not just the fact to save a buck or two, it's more the satisfaction you get when you feel you got a good deal.