Chapter 2: focuses on the practice of pricing analytics. Accordingly, it is rich in practical examples. The chapter opens with a discussion on the types of data used to make pricing decisions and how to develop pricing capabilities. In this chapter, the authors illustrate that estimating the ‘price elasticity of demand’ is as much an ‘art’ as a ‘science’ in practice. They draw from the several organisations’ practices and those prevalent in certain industries, to support their propositions. The latter part of the chapter contains a particularly good case study on Dominick’s Finer Foods. The case study demonstrates how the theoretical concepts introduced in Chapter 1 play out in practice.

Chapter 3: concentrates on two interrelated phenomena, namely, ‘dynamic pricing’ and ‘markdown optimisation’. The chapter opens with a broad discussion on dynamic pricing, highlighting its historical relevance and evolution in buyer–seller exchanges. This first part of the chapter underlines the reasons why some companies readily embrace and/or fail to capitalise from dynamic pricing. The latter part of the chapter examines markdown optimisation – what the authors regard as the ‘most common dynamic pricing application’. Retailers of ‘seasonal and style goods’ are focused on here due to their interest in generating sales and shifting stock through ‘constant in-season price markdowns’. The chapter ends with two case studies, which illustrate how markdowns are used in practice. The first case study focuses on identifying ‘profitable markdown opportunities’ in a ‘slow-moving item’ context. The second concentrates on using ‘linear programming to solve a simple markdown optimisation problem’.

Chapter 4: specifically focuses on the ‘business-to-business environment’. Overall, it centres on the emergent domain of ‘customised pricing analytics’. The chapter examines business-to-business pricing contexts wherein firms reply to requests for bids/proposals with a ‘customised price response’. In this chapter, emphasis is placed on customised pricing models and on highlighting the ‘technical aspects’ of ‘customised price optimisation’. Towards the end of the chapter, the authors discuss how to implement a ‘customised pricing optimisation package’. Usefully, they describe, as a step-by-step process, the ‘pricing analytics methodology’ relating to an application.

Chapter 5: which is the final chapter, centres on the ‘customer behaviour aspects of pricing’. Generally, the chapter highlights the limitations of the ‘rational’ assumptions of traditional microeconomics, and notes how consumers experience a ‘joy/pain’ dichotomy in response to price fluctuations. This chapter stresses the need to understand the psychology of pricing. The authors reveal how such psychological insights can enable companies to evoke favorable consumer responses to pricing promotions and changes. The chapter proceeds to discuss ‘reference pricing’, ‘prospect theory’ and ‘perceptions of price fairness’.