Amazon.com price fluctuations?

From the “inane things I spend all day wondering about” file:

Does anyone know how Amazon.com determines its prices on CDs, DVDs, and video games?

I like to put items I want on a wishlist and keep track of the price over time. Some items seem to hold the same price for months or years, others to fluctuate wildly. Sometimes when an item’s price changes, you can sort of infer the reason-- for instance, Pokemon Diamond and Pearl were expected to sell roughly the same numbers, but Diamond has been way outselling Pearl, so Amazon temporarily lowered the price of Pearl to get rid of extra inventory. Other times there’s no discernable reason-- the director’s cut edition of Underworld, a 3-year-old DVD, has ping-ponged randomly between $14.99, $15.49, and $15.99 over the past few days.

The latter example makes me think there must be some automated algorithm for reevaluating prices. I can’t imagine that there’s some guy sitting in a cubicle somewhere whose job is to check on Underworld sales every four hours and decide whether to lower the price by 50 cents. But if their system is capable of making such fine-grained adjustments, why does a Specials CD hold steady at $14.99 for a year, then suddenly change to $11.97?

Anybody have any theories on this?

My theory is that the Amazon people are pretty good psychologists. If an item is on a lot of people’s wish lists and isn’t moving, then modifying the price is going to get their attention. They may also be constantly shuffling suppliers and their prices may reflect that as well.

What’s weird to me, but which may also be part of Amazon’s cunning plan, is that sometimes items will have stunningly large discounts. For example, a tool that I’m interested in will sell for 60% of its normal price for a few hours. Did Amazon find a small trove of that kind of tool at a great price? Are they simply applying some kind of pricing model to force undecided shoppers to part with their green? Or did someone in the pricing department screw up in some career-ending way? * Shrug *.

If you’re interested in tools, this is an interesting website. When you see a tool price at Amazon, click on this link and see the pricing history. Not quite sure how to word this, but the link needs to be on your toolbar as it only works properly when you click the link while viewing the page at Amazon that has the item you’re after.

[Amazon Price History](javascript: window.location.href='http://www.frozenwarrior.com/~pricewatch/item_price_history.php?aurl=’+escape (this.location.href):wink:

Their home page is FrozenWarrior.com if you need a better explanation of their services.