The rise of eCommerce has brought with it some innovative pricing strategies. Companies invest millions just to remain competitive and it involves large data analysis and pricing strategies. Although some strategies such as pay what you want (PWYW) or name your price (NYP), are obviously not well-suited for all businesses, dynamic pricing is one that can be applied broadly and net benefits for both consumers and retailers alike.
One Such Strategy, Dynamic pricing just leaves your customer unease. Consumers tend to frighten on hearing the term dynamic pricing. A well known perception of dynamic pricing being unfair, dealing with privacy concerns, user to user price variation, purchase behavior. That is how your consumer perceive you. But, dynamic pricing can be consumer-friendly as well and you can retain the trust factor associated with your customers. Customers may understand that the price of product varies from location to location, or yes it depends on product and inventory levels.
But for retailers, the baseline is clear. Dynamic price has more to do with market benchmarking considering what the competitors are doing, setting the optimal marginal pricing for the products. And here the base to dynamic pricing is having the right data , rightly analysed. The use of data and analytics in is likely going to be a basis of competition in future. Those companies that are able to use data effectively are more likely to win in the marketplace
Pricing wars aren’t new, but technology is playing a more significant role in today’s market and product pricing. Retailers such as that of like Amazon have their own price checking apps, which help consumers compare prices and buy at the lowest possible price. The most competitive retailers reprice incredibly often to set pricing standards, increase revenue, and gobble up market share. Some of the largest players in the industry, like Walmart and Best Buy, are changing prices 50,000 times per month or more and Amazon reprices at least every 10 minutes.
As a result, the use of competitive monitoring tools and dynamic pricing strategies are on the rise. Only 22% of retailers are currently using price monitoring software, putting them ahead of the game, but 29% plan to start in the next year. Retailers are beginning to understand that adjusting their pricing strategy will help them compete on a more even playing field with their competitors.
Pricing intelligence incorporated into a dynamic pricing strategy is the answer to the modern day price war. It enables retailers to meet sales and profit margin goals and ensure that they’re priced competitively. Since the biggest brands are repricing constantly, retailers can keep up by implementing dynamic pricing strategies. Competitive pressure is one of the most important factors that impacts price changes, according to 73.3% of retailers. Dynamic pricing can help boost profit, conversions, customer satisfaction, and brand image.
Companies in large need to implement best pricing tools and automate everything from the product info, inventory levels, competitive check and what not to acquire maximum share of the market they are into. Real time data analytics is real important and the need of the hour.
- Amazon reflects new price of its products every 10 Minutes
- Best Buy changes its prices 50K times a month
So, What should I do?
- Choose a solution Type. Types of solutions that business use for Dynamic Pricing
- Choose your Dynamic pricing Frequency: How often you want and you need to change the prices.
- Factorize your Pricing:
Product Supply Levels Geographical Locations Margins Inventory Turn Ceiling Price Time Basement Price and Sales Channel Loss Leader and Market Segment
- To What extent you want to automate your Pricing
- Decide the price Deciders
- Study Conversions
An increasing number of retailers are investing in price intelligence platforms in order to successfully compete in the marketplace. Dynamic pricing technologies can have a direct impact on sales. On average, through analytics clients have seen clients a 22%+ increase in revenue, 7%+ increase in profit, 18%+ increase in checkout conversion rate, and an increased ability to respond to changing prices (48%+ faster response time).