Dynamic pricing has got importance over time. The collection of advantages it brings has created wonders for the companies that have implemented that in the marketing strategy.
Dynamic pricing means a constant change in product prices in a shorter time because of changes in demand and supply. Amongst the key examples for companies that adopted this strategy is the e-commerce hulk Amazon, known for updating prices every ten minutes.
Dynamic pricing for e-commerce players that continuously require up their business to beat the competition as well as provide customers with the most reasonable prices in real-time.
Benefits of Dynamic Pricing
Dynamic pricing offers the necessary flexibility to the business so that you can have control over competitors’ pricing strategies. Here are the benefits of dynamic pricing:
- It provides complete control over the pricing strategy.
- You don’t need to make any compromises on brand value.
- It proves to be cost-effective in the long run.
- You can effectively manage it with the right software.
- It is also error-prone but still, your business will be in your control.
- It offers higher responsive re-pricing.
- It helps in maximizing profits.
- Automation saves cost and time.
Challenges of Dynamic Pricing
Before thinking about dynamic pricing, it is important to consider the challenges after applying the same. Though there are benefits, dynamic pricing is not easy to implement. It’s difficult to find resources for any smaller company, whereas big companies would face a gauntlet for getting few transactions, unsatisfactory data hygiene, or complex contracts. Although, the biggest problem would be consumer disobedience.
Though there is a change in the markets' operations now, some consumers, industries, and laws continue to become firm against the dynamic pricing.
How Can You Implement Dynamic Pricing in Your Business?
There are five key points, which should be remembered before implementing a dynamic pricing approach:
How Can You Implement Dynamic Pricing in Your Business?
- Identifying the commercial goals
- Creating a pricing strategy
- Choosing a pricing method
- Setting the pricing rules
- Validating and testing your strategy
Companies that Used Dynamic Pricing in Their Marketing Strategy
Global companies like Amazon, are well-known to use dynamic pricing as well as are measured a good example of the pricing model. Amazon tends to price products competitively as well as update prices every ten minutes. Therefore, the prices alter when customers add a product to their cart as well as pay for that. According to data, the speed in the price changes has increased profits of Amazon by 25%.
This ride-sharing giant is well-known to utilize a dynamic pricing method using which it powers the prices, which customers pay. Uber utilizes Machine Learning for forecasting market conditions, which has entirety from traffic as well as whether to domestic events as well as international news for pricing method to deal with. So, Uber can regulate prices frequently as per the changing conditions. For reaching the best fare, Uber needs to access a huge amount of real-time data.
In this hospitality industry, Airbnb stands out by selecting dynamic pricing. Although, the company works as the platform for third-party hosts for listing rentals. Therefore, technically it depends on the hosts to select or drop Airbnb's price approach. This approach automatically adjusts the prices within the limit, which a host could set. Airbnb considers many factors to set the prices:
- Customers’ search to do similar listings
- How frequently a host chooses to host
- Listing location and type
- Quality of listing and present amenities
- Seasons and demands
- Time left for booking
- Total reviews and views
Google utilizes dynamic pricing in Google Ads (or keywords). This is through determining real-time supply as well as demand rates in the market. Therefore, for example, you want to target a keyword ‘gift' during the holiday season that might come at much higher prices than other days.
5. General Motors
General Motors has implemented dynamic pricing in auto parts in 2014. It had used mypricelink.com for delivering original GM parts in the shops. Soon, Ford had followed GM in 2018. The main point for impact shops is the ability to make quotes for the customers as well as insurance agencies straightway.
Disney had introduced dynamic pricing in theme parks. Unluckily, there were many changes in prices, which depended on different categories like value, regular, as well as peak. So, prices fluctuated for Disneyland as well as Walt Disney World.
7. Major League Basketball
All the professional sports have included dynamic pricing including MLB or Major League Baseball. They used the shift of demands and supply for setting the ticket prices. The price adjustments also rely on other factors like team performance and weather.
This airline industry has first adopted dynamic pricing. For instance, tickets for the same flight for the same destination could have various prices for diverse customers on the same date. As airlines are well-known to charge different prices for similar ticket purchases on various days and this was not top-secret that airlines use dynamic pricing.
Despite the above companies, 3M, McAfee, Lyft, Walmart, AT&T, etc., also have utilized dynamic pricing for setting optimum prices for their services or products.
Apply Dynamic Pricing Using a Price Extraction Tool
Out-of-date pricing data could damage even the finest pricing strategy as well as hurt your profits. So, price scraping has got prominence as well as has cemented the value in different business forms during the present era. Price data scraping is done in the real-time price data guarantees about your pricing getting up-to-date. Additionally, this will make that easier for understanding the market trends.
X-Byte Enterprise Crawling's price data scraping services provide high-quality and competitive data, which will assist you in formulating an efficient pricing strategy. Any good price model would also assist in creating customer loyalty. Also, with an efficient price scraping tool, the businesses can increase the market share by negotiating superior deals with the vendors. So, even a market-driven strategy finds an upgrade.
Contact X-Byte Enterprise Crawling to understand how you can implement dynamic pricing strategies in your business.