In the modern era, customers have become more savvy, with so many retailers online they can easily click away from your website and shop with one of your competitors instead. A great marketing tool to keep your customers interested is using dynamic pricing instead of fixed pricing.
For decades, customers have haggled for discounts, when companies started mass marketing their products and services, they collected data – meaning they could price their items easier, which appealed to most people.
Of course, most prices now are now set according supply and demand, this meant businesses lost the ability to negotiate directly with a customer, something which has happened for hundreds, if not thousands of years.
However, many ecommerce stores are now thinking using dynamic or flexible pricing once again, after all think of airlines, they change their pricing based on peak times. Uber charges more for high-traffic hours, or for traveling in certain neighbourhoods.
As customers are engaging with brands in new ways, e-commerce businesses must now attempt to sell to a market which wants to be heard as an individual, rather than a collective once again.
Dynamic pricing use machine learning technology to precisely personalise pricing in ways that were formerly impossible. E-commerce can now pinpoint the price individual customers are ready to pay and at the same time optimise for revenue. To achieve this, your e-commerce shop will piece together many types of data.
Today pricing will take recommendations and personalisation to the next level, as software can bring data together from an individual’s behaviour, this means they can tailor the experience and offer pricing or discounting that might encourage a purchase.
For example, buyers that responded to a Twitter post may get a different price from a person who’s just landed on your website from a search engine.
Equally, a product may get discounted if the software feels the user is about to leave the e-commerce website. Of course, as a business owner you’ll have control of how much your products can be discounted by, but as you can see in many cases this could easily lead to higher revenues and sales volumes.
Remember, dynamic pricing software not only assesses customer behaviour and supply and demand but can monitor product prices on other sites and analyse market trends. Equally, dynamic pricing can be used to recognise when you can raise prices to exploit margins without harmfully impacting revenue.
For example, perhaps your main competitor is priced higher than you, or you are the only seller in the market. In these scenarios, you can test higher prices to estimate the wider market.
ecommerce market becomes ever more competitive, retailers need to be able to
easily monitor their competitors and the wider market as a whole. Pricing
intelligence software and dynamic pricing allow for this and to include other
factors such as the level of demand and conversion rates.