Stochastic pricing – Is this the future?

Freshly out of the Quantitative Methods course and into Quantitative Methods course part 2 in this term, forces me to see the text more in terms of numbers and statistics. Off late one word which catches my fascination is a seemingly complex statistical jargon known as “Stochastic”.
If one traces the roots of the word, the roots lie in Greece and means “Skilled at aiming”, since stochos is a target. In very layman’s terms, it is an approach in which a target value is calculated probalistically based on a combination of variables.

This reminds me of some of the backdated issues of Economist. People are talking of stochastic pricing for Baseball matches. Sounds intriguing to say the least, but makes business sense. And if one thinks through, it is a win-win situation for both the buyer and the seller.

http://www.economist.com/blogs/freeexchange/2009/05/taking_the_hub_out_of_stubhub\

Taking cue from this idea, big cold drinks giant came up with the idea of coming up with a vending machine which will sense the outside temperature and other stuff (read as variables) and come with the price of the can. It was an attempt for stochastic pricing. I am not too sure why the idea was abandoned.

Extending the pricing for IT. One is hearing pricing based on

-          - Number of incidents for Application management.

-          - Number of defects or rather absence of defects for application development.

-          - Availability percentage for application support

Going by the same logic, am I staring at a future where salaries are determined stochastically? ;-)

Let us hope not, but pricing the services and products stochastically is indeed something companies should look forward to. But there are many variables to consider!