Peak pricing is another term for dynamic pricing, where the cost of a product or service changes in response to fluctuations in demand and market conditions. A common example is airline ticket pricing, where fares increase during peak travel periods and drop during off-peak times.
Dynamic pricing relies on market data, technology, and sometimes artificial intelligence to adjust prices in real-time. It maximises revenue by capturing higher margins during periods of strong demand while stimulating sales when demand weakens.
Other options are different strategies:
Penetration pricing involves initially low prices to gain market entry.
Limit pricing aims to deter new entrants by setting prices low enough to discourage competition.
Price skimming involves launching at a high price, then gradually lowering it as demand declines.
In category management, understanding pricing models like dynamic pricing helps procurement anticipate supplier pricing strategies and develop negotiation tactics.
[Ref: CIPS L5M6 Study Guide, pp.180–182 – Pricing models and procurement]
