The entry of dynamic pricing into the era of e-commerce has entailed an increase in the overall competitiveness when selling online. Keeping your prices agile with a strategy that fits in with the given market and not least your commercial needs and ambitions, you will constantly be competitively in touch with the market demands. Dynamic pricing is basically based on your competitors’ data. Online retailers should implement dynamic pricing in their business, as based on data from competitors, they would be able to improve their online sales. To help you out with dynamic pricing, we have listed five examples of how you use dynamic pricing to boost your online sales.
#1 Reduce price for a time period
A popular product you offer can be reduced in price for a certain time to surpass the competition, increasing sales for being the cheapest provider. To compensate for the profit reduction, during the buying process, other complimentary products are offered at a price above what your competitors are offering. Using this strategy for dynamic pricing, you can sell more products and maintain or increase the total profit margin. The client gets the feeling that he/she has obtained a good bargain (which in many cases is so) and that contributes to the customer’s loyalty.
#2 Check your competitors’ pulse
Don’t miss a single opportunity to offer your product to potential clients or increase profit margins. With direct data and insights from your industry, dynamic pricing monitors the competition and the market for each product. This real-time knowledge obtained from data establishes factors for optimizing prices, so your product is always attractive in the eyes of your potential client. In other words, the price of your products and services is based on the market conditions and your competitors. This strategy helps you stay attractive, ahead of your competition, and it can be easily combined with other pricing strategies.
#3 Offers, deals, and discounts
Coupons and offers, customers love deals and special offers. Providing special offers, deals, and discounts do not only boost sales but also increase traffic to your online store. Real-time monitoring of the market and competitors helps to target special offers better. Using dynamic pricing to place offers increases the impact of promotional campaigns and attracts customers by establishing a basic price and later making changes to it, which could be a launch discount, seasonal sales, or promotional offers. This is the top dynamic pricing strategy used by many retailers, so there may be something about it.
#4 Gain control and stay competitive
The buzzword is monitoring. Price searching engines are widely used by customers to find the best deal. Thanks to dynamic pricing, you gain control over pricing strategies by accessing real-time trends for price levels in the industry. Thus, you can set the correct price and protect minimum profit margins. Using competitors’ pricing data as a benchmark for your products is often used to set your price, but going a little below the competition you will get the advantage of being competitive from day one. As a retailer, you can ensure that your products are always €1 cheaper than those of your competitors when using this strategy. Dynamic pricing helps you stay competitive and increase your sales while protecting your minimum margins.
#5 The law of supply and demand in dynamic pricing
The last example is a well-known method applied by many companies worldwide and can be a simple way to use dynamic pricing in your price strategy. With the dynamic pricing algorithm, you can get insight into your customers’ profiles and when they are willing to pay a higher or lower price. Based on this data, you can set up your price to be higher when there’s a certain high demand for your product. Vice versa, when there’s a lower demand for a product, you can lower the price. This way your price is dynamic and changes according to the supply and demand in the market while protecting your minimum margins.
When it comes to establishing dynamic pricing in your e-Commerce, PriceShape helps you with setting different strategies for you e-Commerce business.
Download our e-book for more information here:
[hubspot type=form portal=4630175 id=d1f7893b-6181-41d5-a69a-a935d5a794ae]