oraclecloud.com, as data

## Overview* Applies different prices for the same product* Depending on relevant contextual factors or attribute values* In order to maximize capture of revenue* From customers based on their perceived willingness to pay and perceived valueAs shown in the following image, static pricing employs a single price point for all customers while dynamic pricing incorporates multiple price points for the same product depending on the dynamic context of the pricing.So how can you price dynamically to collect more value from customers? Examples of dynamic pricing include pricing differently:* In one region versus another (based on what these segments of customers will pay)* For one set of customers versus another set (based on size or industry some may be willing to pay more)* In one channel versus another (ex. self service vs. direct sales)* For urgent orders versus ones with longer lead time* For customers willing to commit to buying a large quantity versus those that do notThe diagram below illustrates an example of where the pricing differs between small self-service customers and larger customers with a sales agreement.Using methods such as these to define differential pricing is collectively referred to as pricing segmentation. Dynamic pricing can even be based on a combination of many factors (which is commonly referred to as micro-segmentation).### CPQ's Role in PricingPricing consists of four major business functions: Price Setting, Price Execution, Price Negotiation, and Rating.* **Price Setting** - The defining of price and discount guideline values while considering all relevant factors (e.g. competitor prices, demand analysis, cost to produce products, etc.).* **Price Execution** - The application of price and discount policies at run-time. Quote optimization, enforcing policies, and evaluating profitability are some of the driving factors in successful price execution. It also includes:* The import and entry of prices.