Many online stores know how important dynamic pricing is, and they use dynamic pricing
to increase their sales. We recommend that you read the suggestions we wrote to increase your sales with dynamic pricing.
Pricing determines how successful an online store will be. Setting the affordable price for the product you are selling will affect people's purchasing decisions. Dynamic pricing will come to your aid. Dynamic pricing will meet every need for your pricing.
What is dynamic pricing?
It is a pricing strategy that allows a business to change the prices of its products or services when necessary. Some of the reasons your prices will need optimization are:
- Market's wishes
- Competitors' pricing
- Availability of stock
- Sales targets
- Conversion rates
Why is dynamic pricing important in e-commerce?
Most store owners are aware of how important dynamic pricing is. Keeping track of your competitors' prices will increase your profit rate. Here are a few articles to explain why dynamic pricing will help you a lot.
- Increase in profit margins
- Competitive advantage against competitors
- Increase in sales
- You have more control over pricing strategies.
- You can respond faster to fluctuations in demand.
- You can eliminate the manual process where you follow the prices of competitors.
- You can respond faster to supply fluctuations.
- You can adapt to market trends faster.
- You can more easily optimize your prices on the basis of products.
- You can adapt more quickly to the very dynamic pricing environment.
Demand-based pricing has a major impact on your customers' purchasing decisions. According to a study, 80 percent of consumers always compare prices before purchasing a product or service. Having a flexible pricing strategy will have a great impact on your sales.
How does dynamic pricing work?
Before implementing a dynamic pricing strategy, you need to understand how it works. It is very important to know supply, demand, and prices of competitors in determining dynamic pricing. Apart from that, it would be good to know the following information.
- Profitability analysis of your company
- Automatic pricing
- Future pricing trends
- Demographics and behavior analysis of your customers
- Market analysis
- Real prices and availability of products
- Products information
- Shipping costs
Are there pricing types other than dynamic pricing?
Dynamic pricing may not suit everyone. You should choose different pricing types according to your target audience and type of store.
Segmented Pricing: It is a type of pricing that offers different pricing for different customer groups based on location or demographic information.
Peak Pricing: It is called when a store cannot meet the demand and increases the prices.
Time Based Pricing: Making discounts at certain time intervals is called time-based pricing.
Penetration Pricing: The prices of your products are set at low prices first. It is then increased to the same prices as the market.
Tips for implementing your dynamic pricing strategy
1. Write down the initial price of the product: Adjust the prices of your product according to the prices in the market.
2. Unite software and people: Although dynamic pricing is made by software, occasional involvement of a person in this software will increase your profits.
3. You should be flexible, but not too flexible: The pricing you set should not cause you loss.
4. Take a holistic approach: Don't try to force-sell your product at a price you want to make a profit. Choose a price that the customer would also like to buy.
5. You don't always have to follow the rules: Your expenses will be different from your competitors. You should adjust your prices in a way that does not harm. You shouldn't mind being the cheapest in case you lose money.
6. Price differentiation: You can apply different prices to variants of your products.
7. Discounts and coupons: You should not share excessive discounts and coupons, and only provide these advantages to users in a certain category.
8. Test your prices: You can find the best price group by applying different prices for your product.
Dynamic pricing examples
Amazon: Amazon is number one when it comes to changing the prices of products. According to reports, Amazon changes its prices every 10 minutes.
Walmart: Walmart implements flexible pricing strategies. They reported that their sales increased by 30 percent thanks to their flexible pricing strategies. Walmart changes more than 50 thousand prices per month.
Airbnb: Airbnb increased its prices with dynamic pricing when there was intense demand for homes. For example, prices increase automatically during holidays.
Uber: It is one of the companies that changes its prices based on the availability of drivers.
We think we have provided enough information about dynamic pricing in line with the information we have written. By understanding the pricing strategies of your competitors, you can determine what strategy to follow.