The buyers then compete to offer the price most acceptable to sellers.
Auctions work best for commodities and unique items.
The general intent of these negotiated pricing systems is to allow buyers and sellers to enjoy the benefits of dynamic pricing without sacrificing their core competencies. Not for Everyone Dynamic pricing is not for everyone. Small purchases are not worth the time and energy, and MRO material exchanges are best handled with a companywide or facilitywide contract. Moreover, given that dynamic pricing works best when buyers and sellers remain anonymous, it will be slower to catch on in places where business relationships are considered very important, such as Japan or Korea, than in the United States and Western Europe. Copyright IDC, 2001.