• Business
  • SEO
    • Content
  • Social Media
  • Branding
  • Ads
  • Others

How Does Dynamic Pricing Work?

2.6KShares
127.8KViews

If you're not familiar with it, dynamic pricing can be confusing.

It isn't, however.

Because it is more profitable than any other e-commerce pricing technique, dynamic pricing will soon be routinely used by the majority of online retailers.

In order to avoid confusion, let's first define what we mean by dynamic pricing so that we know what we're talking about.

Dynamic Pricing | Marketing Strategy

COPYRIGHT_MARX: Published on https://marxcommunications.com/dynamic-pricing/ by Keith Peterson on 2022-01-19T07:41:25.752Z

What Is It?

Dynamic pricing refers to a pricing approach in which prices are adjusted in response to shifting market conditions.

It allows you the freedom you require in a fast-paced industry like e-commerce.

What do I mean when I say things move at a rapid pace?

The days when people could only shop at their local supermarkets are a thing of the past.They'd only travel to the next town on rare occasions, usually in search of better deals or a bigger selection of goods.

Other times, they'd be satisfied with the goods sold at the corner store down the street..

That was a different time and place, for sure.

In today's world, information is at our fingertips at all times.You don't even have to leave your house to find out what's for sale or to buy it.From the convenience of your own home, you can buy anything at the best possible price.

Consider your personal shopping history.

How do you begin the process of purchasing?

What Are Some Dynamic Pricing Strategies?

Price setting in retail has traditionally been done in one of three ways: through cost-plus pricing, competitive pricing, or value pricing.

The simplest of the three approaches is the cost-plus model.All you have to do is multiply the product's cost by the desired profit margin.

Following your opponent is the goal of the competitor-based approach.For example, if your competitor lowers or raises the price of their product, you'll have to do the same.

According to this strategy, products are priced according to their elasticity of demand.Because various people place varying values on different things, everyone has a price ceiling for what they'll pay for a product.Customers' perceptions of the worth of a product are taken into account when using value-based pricing.

Different pricing systems can be combined with dynamic pricing software.In addition to stock levels, popularity, and even the weather forecast, certain softwares allow you to insert more important information.

How To Implement Dynamic Pricing

This doesn't mean that dynamic pricing can't be implemented correctly.As a result, you should be able to generate more income from some consumers than others.If you use them in the right way, they will work for you:

Price Differentiation - Two Prices Are Better Than One

Quantifying your customers' personalities and then aligning packaging and pricing to their needs is one of the most fundamental concepts in pricing strategy.In most cases, you'll find that your personas aren't all created equal, and if this is the case, you're probably not thinking about your personas in the appropriate wayYou'll be able to charge different prices for different versions of your product in order to attract customers of varying sizes and bring in a dynamic revenue stream.Check out this page for more information on product and feature differentiation.

Ensure You’re Using A Proper Value Metric

Value pricing, which refers to how much you're actually charging for a product, goes hand in hand with price differential (per user, per GB, etc.).While charging for a physical product makes this more difficult, in the software world, you may divide your pricing based on how many users you have, how much storage you have, etc., or how many views you have.As a result, each consumer pays you at a different rate, resulting in greater dynamism and less money lying about.Take a look at this breakdown of value measurements and how to correctly use them for additional information on value metrics.

Utilize Time In An Auction Type Model

Price increases and decreases based on time are common practices for sporting events and music festivals.It's a common occurrence for airlines and ticket booking websites.The cost of a new widget or a beta version of software can both benefit from dynamism.

Couponing And Discounts

There are times when a discount can be used efficiently to provide a dynamic pricing to a select group of prospects or customers, but we don't recommend them because of their detrimental influence on future sales and your brand.According to a recent study, 70% of millennials follow brands on social media in order to gain discounts and other incentives to purchase products from the company.

However, it is less likely than on a public site with varied prices and is more socially acceptable to ensure that the coupon does not spread with social products.Check out our discount pricing post for more information on discounts and how to get them.

Conclusion

When you take advantage of all that dynamic pricing has to offer, you'll be able to better manage your business' growth while also avoiding conversion losses.

Choosing a proper data analytics provider is critical when deciding whether or not to dynamically adjust prices.The above are some considerations to keep in mind while trying to choose a reliable source for pricing information

Share: Twitter | Facebook | Linkedin

About The Authors

Keith Peterson

Keith Peterson - I'm an expert IT marketing professional with over 10 years of experience in various Digital Marketing channels such as SEO (search engine optimization), SEM (search engine marketing), SMO (social media optimization), ORM (online reputation management), PPC (Google Adwords, Bing Adwords), Lead Generation, Adwords campaign management, Blogging (Corporate and Personal), and so on. Web development and design are unquestionably another of my passions. In fast-paced, high-pressure environments, I excel as an SEO Executive, SEO Analyst, SR SEO Analyst, team leader, and digital marketing strategist, efficiently managing multiple projects, prioritizing and meeting tight deadlines, analyzing and solving problems.

Recent Articles

  • Pros And Cons Of Starting A Small Business Online While In College

    Business

    Pros And Cons Of Starting A Small Business Online While In College

    Most great entrepreneurs of the last half-century were in their teens or twenties at the time of their achievements.

  • Ted Rubin Teaches You To Be Better At Marketing

    Influencers

    Ted Rubin Teaches You To Be Better At Marketing

    Ted Rubin is a very popular CMO with 516K followers on Twitter who learn from him about growth hacks, how to think of ideas without being distracted, and how to keep a relationship healthy.

  • How To See Who Blocked You On Twitter? Things You Can Try Right Now

    Social Media

    How To See Who Blocked You On Twitter? Things You Can Try Right Now

    Twitter users can change how their feed looks and filter out things they don't want to see. One thing you can do is block someone. If you're not sure how to see who blocked you on Twitter, you've come to the right place.

  • How To Turn Off YouTube Shorts Permanently In Different Ways?

    Social Media

    How To Turn Off YouTube Shorts Permanently In Different Ways?

    YouTube Shorts is one of the newest things on YouTube. How to turn off YouTube shorts? If this question bothers you, you've come to the right place.

  • How To Tag Someone On Twitter? Increase Your Engagement

    Social Media

    How To Tag Someone On Twitter? Increase Your Engagement

    Tags are another way to mention someone in a tweet on Twitter. We all know that Twitter limits the number of characters you can use in a tweet, so tagging is a good way to avoid using up extra text space. If you want to know how to tag someone on Twitter, you are in the right place.

  • Rand Fishkin - Master The Art Of SEO From The Wizard Of MOZ

    Influencers

    Rand Fishkin - Master The Art Of SEO From The Wizard Of MOZ

    Rand Fishkin has a lot to share with the Twittersphere. He was the CEO of MOZ, a well-known SEO platform, and is an entrepreneur.

  • How To Change Twitter Language On Mobile And Desktop?

    Social Media

    How To Change Twitter Language On Mobile And Desktop?

    Depending on where you live, Twitter will be set to a different language by default. If you live in the US, Canada, or the UK, it might be set to English by default. If you want to know how to change Twitter language, you are in the right place.

  • How To Delete Twitter Search Suggestions? Remove Search History

    Social Media

    How To Delete Twitter Search Suggestions? Remove Search History

    Platforms like Twitter keep track of our social media activity around the clock and use our activity history to suggest things like search prompts, products, and people you might know. If you want to know how to delete Twitter search suggestions, you are in the right place.

  • Neil Patel - 6 Lessons To Learn From The SEO Guru

    Influencers

    Neil Patel - 6 Lessons To Learn From The SEO Guru

    Neil Patel is an American business owner, consultant, and digital marketer who is known for his successful blogs, books, and businesses. Neil's success really took off after he wrote The Art of SEO, his first book.

  • How Long Can Twitter Videos Be - Make Every Second Count

  • How To See Recent Followers On Instagram? Check Who Follows You

  • Adam Grant - Lessons And Motivation From The B2B Influencer

  • Does Twitter Show Who Viewed Your Profile And How To Check It?

  • What Does A Marketing Coordinator Do And How Much They Make?