No.23   February 1, 2001   Pricing Strategies in the E-Business Age   Kazuhisa INOUE, Hisao NAKAJIMA and Naohiro YOSHIKAWA       By utilizing the leveraging functions of the Internet, companies have been able to gain a wide range of flexibility in pricing their products and services. It has also become possible for online retailers to measure a customer's willingness to pay (i.e., the maximum one is willing to pay) by utilizing the data they have collected on past purchases and consumer behavior or by introducing auction systems, and to reflect these results in determining prices (i.e., the overall process of setting prices).   Digital contents such as software, music and video offerings--all of which are considered to be highly promising products for online distribution in the age of e-business--share one major characteristic in that they can be reproduced and distributed at extremely low costs. Accordingly, a key to success in today's e-business era will be the ability to utilize this characteristic by incorporating value-based pricing (i.e., pricing that takes into account the willingness to pay of individual consumers) in business strategies. Contents I Impact of Digitization and Networking on Pricing 1 Accelerating the Distinction Between Information and Goods 2 Price Changes Becoming Easy 3 Marginal Costs for Digital Content Distribution Close to Zero 4 Structure of Value-Based Pricing Techniques II The Emergence of Value-Based Pricing in the E-Business Era 1 One-to-One Pricing Benefiting Both Companies and Consumers 2 One-to-One Techniques Approximated in Group Pricing 3 Versioning Offers Multiple Versions and Prices 4 Bundling to Combine Complementary Products and Services 5 Willingness to Pay Accurately Reflected in Auctions 6 Option Pricing Using Financial Theories III Future Challenges in Applying Value-Based Pricing to Corporate Strategies 1 Three Problems in One-to-One Pricing 2 Preconditions for Group Pricing 3 Utilization of the Context Effect in Versioning 4 Combining Mutually Complementary Products is Important in Bundling 5 The Potential of Auctions and Reverse Auctions 6 Cultivating New Business Fields Using Options 7 Needed Pricing Strategy in the E-Business Era GO to PDF