In today’s age of emerging business trends, companies continuously strive to one-up the competition by grabbing the next big idea. Each organization incessantly innovates to gain a competitive advantage over the rest, to come out as a winner and take away all the spoils.
While technology has evolved beyond what we can possibly imagine, human nature has inherently remained the same when it comes to the creation of businesses. Which is ceaselessly contriving to bring forth better ideas, automating intermediate processes, and evolve implementation. But in this ever dynamic sphere of online retail, one disrupting strategy isn’t enough. There are hundreds of variables, thousands of products, and a large pool of customers which determine how far it will go along.
The Pricing Dilemma
When planning to buy something, the first thing we often determine is our budget. Then like any smart shopper, we visit all the retail sites known to man to look for the best deal available. It wasn’t long after that e-retailers realized that the hunt for the best prices for a given commodity is where growth opportunities lie. And to be able to give the right price at the right time is the key to high profits.
One way to go about setting prices for your products is by using dynamic pricing. Recently there has been a lot of negativity surrounding the concept of dynamic pricing simply because the prices of the products change very frequently, and people end up paying different prices for the same product. But don’t promo codes and discounts essentially do the same thing?
Dynamic Pricing: New Awesomeness in town
Putting some real thought into the concept, dynamic pricing essentially boils down to pricing the products according to market forces and internal factors. Dynamic pricing can essentially be used in two ways-
- First, Prices are dropped when the competitors do so or when retailers wish to clear the stock of certain items.
- Second, and less heard of is when the prices of products are raised. This usually happens when you notice that your competitor has run out of stock or you are the only seller in the market with that particular product. Retailers can choose to hike the prices when the demand is high or lower them to bring in more revenue.
Take for instance the two main players in the field of competitive pricing: Wal-Mart and Amazon. With a whopping 44 billion in sales, which have been growing steadily, Amazon makes it a point to change the prices of some of its products every 10-15 minutes to stay ahead in the competition. Wal-Mart isn’t far behind with around 50,000 price changes in a month. These numbers may not seem huge but in reality, they are only a fraction of price changes that happen in the market every day.
All in all, dynamic pricing is simply awesome. It gives you a greater amount of control over the pricing strategy. When using dynamic pricing you have access to the real-time price trends of thousands of products, which gives you a fair idea about the supply and demand of the individual products. Now, you can set your prices that increase revenue while still keeping your profitable.
Dynamic pricing also allows for greater flexibility without compromising the brand value. The price at which you sell your product tells a lot about your brand, Indulging in dynamic pricing can set a price floor which would allow retailers to reflect their brand value and stay profitable at the same time.
What’s even better is how dynamic pricing actually saves you money! By taking into account all the forces operating in the market like price fluctuation, prices of the competitors, demand, and supply etc. you can set a price which yields profit despite the ever fluctuating market condition. However, while devising a pricing strategy, keep in mind the following
The best part is yet to come. Dynamic pricing can be automated with the right software. No more looking at changing numbers and indulging in the guessing game. According to the nature of your business, you can choose from an array of pricing software that serves all the needs of your company, effectively reducing cost and increasing efficiency.
Time to one-up!
While stepping into the game of dynamic pricing, it is very likely for one to get confused and baffled by the sheer competitiveness of the industry. Start small, take one technique at a time and experiment how it serves your business. One great trick to use is segmented pricing. As you arrange the products from value to premium, capturing a larger share of the market and charging for the products accordingly. This neat little trick is used by Apple as they take out several versions of the same phone ( eg- 5C and 5S).
We often see fluctuations in the market, where the prices of certain products skyrocket. This mainly happens when the demand for the product is very high and the supply is low. Go by the technique of peak pricing in such situations. This technique is also used during special events like movie releases and championship games to squeeze out maximum profit from the official merchandises.
In today’s market, there are more tricks up the sleeve than ever, consisting of new ways to disrupt the ever transient scenarios of e-retail business. Every retailer needs to be able to monitor the changing trends and adapt quickly in order to remain profitable in the long run.
Find yourself a pricing company or a data expert or simply meet us for a cup of coffee at Datahut.