Ideally, companies should ask the price for a product which is equal to the value a consumer attaches to a product. This is called value-based pricing. As this value can differ from person to person, it is difficult to uncover the perfect value and have a differentiated price for every person. However, consumer's willingness-to-pay can be used as a proxy for the perceived value. With the price elasticity of products, companies can calculate how many consumers are willing to pay for the product at each price point. Products with high elasticities are highly sensitive to changes in price, while products with low elasticities are less sensitive to price changes (ceteris paribus). Subsequently, products with low elasticity are typically valued more by consumers if everything else is equal. The dynamic aspect of this pricing method is that elasticities change with respect to product, category, time, location and retailers. With the price elasticity of products the margin of the product, retailers can use this method with their pricing strategy to aim for volume, revenue or profit maximization strategies.

Retailing today is a world of constant change. Businesses need to be able to quickly react to competitors and market activity to win price-sensitive customers.

To be more simple - price of the item depends on shoppers' purchasing habits for that particular product at a given season, is it bought along with the other product? and other factors like month end or month begining.