Article at a glance:

Getting prices right on the Web

Internet shoppers always search for the cheapest price. This mistaken belief was at the heart of many an Internet start-up's mania for slashing prices on the World Wide Web. Because the Internet, the reasoning goes, is the most transparent and efficient of markets, low prices—for both consumers and businesses—outweigh such factors as product benefits, quality, and service. But on-line customers are neither slaves to prices nor clones of traditional shoppers. Instead, they base their research on a wide range of factors.

The take-away

Far from being a price destroyer, the Internet can bring new detail to pricing strategies, thus creating enormous value. But companies must act quickly and rethink their on-line policies before habit and customer expectations make change difficult if not disastrous.