Why Dynamic Pricing Is Key For E-commerce Retailers

Econsultancy highlight how dynamic pricing is a pricing strategy, in which prices change in response to real time-time supply and demand. It enables retailers to remain competitive with 24/7 price monitoring, changes and boosting profits by 25% on average. Providing retailers the flexibility to decrease prices, to increase sales when they are sluggish and increase prices to generate more profit, when they are booming.

Pricing intelligence software has already caught on as 22% of retailers have chosen to implement it. An additional 7% plan to start using it within the next six months and 36% in the next year. This shouldn’t be surprising, since research has found that price optimization software improves gross margins by 10%.

Dynamic pricing has the additional benefit of providing retailers with additional insights on market trends. Retailers can implement different price levels and observe price elasticities before finding the optimal market price. The top dynamic pricing tactics for online retailers include:

  • Segmented pricing
  • Peak pricing
  • Time-based pricing
  • Penetration pricing

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