What is Dynamic pricing?

If you own an e-commerce business or are responsible for developing pricing strategies for the company you work at, you might have heard of dynamic pricing.

It has become a trend amongst retailers, and now brands as well, who want to have total control over their market share and improve their competitiveness online.

Amazon is certainly one of the online retailers and marketplaces e-businesses compete with the most, as they change their prices on average every 10 minutes, offering very attractive prices to buyers. This online giant has been applying dynamic pricing strategies on a daily basis, but:

• What exactly is dynamic pricing? 

• How does it work? 

• And most importantly, why do online businesses need dynamic pricing solutions?

Defining Dynamic Pricing

Dynamic Pricing is a pricing strategy that enables businesses to set multiple price points according to different factors, such as time of the year or customer demand. Contrary to static pricing, it allows an expansion of revenue generation instead of having the same price level in every market situation and less revenue stimulation.

In the e-commerce environment, dynamic pricing is used as a method to adapt the prices of products based on a set of predefined rules that respect the profit margin. This helps companies stay competitive in the market and adjust their prices according to their competition.

But, how can an e-commerce business know which price to select for its products? This is when the use of dynamic pricing solutions comes into play.

How does a Dynamic Pricing solution work?

Although there are still many businesses setting prices manually, they observe how time-consuming and costly it is to monitor prices one by one. Since prices change so fast in the Commerce Everywhere era and consumers are getting more and more demanding, the only solution for leading the market is to choose price intelligence softwares, like our Netrivals solution, which browses the web and compares prices from over +32K websites.

A dynamic pricing solution suggests prices for your products according to several rules or parameters and considering competitors’ prices. In order to calculate the best price for your products, it takes into account your acquisition price, the prices in your catalog, the number of existing competitors for each of your products, as well as the availability of stock.

Thanks to this technology you are able to set pricing rules that make sure you always offer the best prices while respecting your profit margin.

Imagine your goal is to always offer the lowest price to your customers, for instance, then defining this pricing rule on our dynamic pricing solution might be the right choice for you. You will then be able to decide on which direct webs, marketplaces and aggregator websites to apply that rule, making sure that online users land on your website and choose your product over the ones of your competitors.

Dynamic pricing is a very useful problem-solver but only when applying data-driven pricing softwares like the one we provide which ensures precise and real-time data.

Did you know…

80% of our customers enjoy an increase in sales and Buy Box ownership during their first 15 days thanks to our Dynamic Pricing solution.

Is Dynamic Pricing legal?

Although it may seem intrusive to have access to all the prices of our competitors’ products, what a pricing solution does is gather information that is publicly available on the web. As long as the prices do not discriminate in any way based on gender, race, religion, for example, the fact that prices change continuously and thanks to technological solutions, is not illegal at all.

Why Dynamic Pricing is a “must” for your business

This pricing strategy is the key to save time and money, as well as to increase your ecommerce conversions overall. Below you will find all the benefits of integrating a dynamic pricing solution:

Monitor your competition: Visualize the price of your online rivals and anticipate changes.

Make the right choice: Make better decisions concerning your products’ prices.

Real-time data: Obtain a real vision of the price of your products in the market.

More efficiency: Save time and money and have total control of your pricing strategy.

Increased revenue: Be more competitive and increase your sales.