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SOME PRICES CHANGE AT GLACIAL SPEEDYou make several useful points in ''Good-bye to fixed pricing'' (Special Report, May 4), but 10 years of pricing consulting with leading software companies indicate the changes will take longer than you suggest. Mature products or products that are perceived as commodities will feel the greatest price pressure. Differentiated products or products in short supply are always able to resist these pressures. While the Internet and other computer technologies present opportunities for vendors and lower prices to customers, they will not lead to rapid change for two reasons: First, pricing is not done in a vacuum but is one element of a complex, interrelated business system. Second, the links between the price seen by the customer and vendor are slow to respond to change. Even if prices change dynamically, sales-compensation plans do not. Even when customers minimize the role of resellers to get better prices, their spending changes slowly, since they must still meet the need for factory service and support. How quickly will companies replace part of their purchasing staff with a bunch of software robots looking for the best deal? Even the best and the brightest need time to adapt their business model to new pricing paradigms.
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Updated May 14, 1998 by bwwebmaster
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