How You Never Compromise on Your Profits with Dynamic Pricing

1. How You Never Compromise on Your Profits with Dynamic Pricing ===================================== If you want to pay fixed prices, then you should go to the brick and mortar stores because the retail assistants could never get to change the little shelf edge tickets as quickly as the prices change online. With dynamic pricing software, eCommerce prices can be tuned to change continuously, squeezing every bit of margin from the customers and then keep the sellers a step ahead of the competition. Dynamic Pricing Software eCommerce dynamic pricing software updates their prices automatically, on a repetitive basis, to ensure that each customer pays an appropriate price for the right product at the right time. Prices get adjusted according to different factors and market conditions like time of day, demand, location, competition, and even the maximizing their revenue and profit. It's an economic theory brought to life. customer buying patterns, Don’t be satisfied with just Excel If truth be told, if you are still using Excel for pricing, you are missing the bigger perspective. While it can just about handle the cost-plus pricing, dynamic pricing and Excel don't mix. It's not humanly possible to digest the data in every row of a vast spreadsheet, so we generally tend to focus on optimizing the top bit–the best sellers, the 20% and then ignore the long tail, the 80%–where the largest overall gains are found. Excel is pretty slow. You need to download the prices from your website, manipulate them offline, and then re-upload them to your website one more time. Each manual stage wastes more time and then creates the potential for human error. Dynamic pricing software does it all for you, more effectively than any

2. human pricing team could, and it also works weekends, holidays, and pandemics too! It's working for Amazon… Amazon is the prime example of dynamic pricing, reportedly changing its prices 2.5 million times a day, which means that the average product price changes once every 10 minutes. Prices can even change after items have been added to the cart. Yes, it might frustrate the odd customer, but Amazon's pretty cool with it - it’s a small price to pay for a strategy that has delivered global domination. Amazon can use dynamic pricing to a devastating effect as it has such an insane volume of data. How much? Hard to say. But in a 2018 book, "Swipe to Unlock: A Primer on Technology and Business Strategy," co-authored by Google Product Manager Neel Mehta, the estimate was one billion gigabytes. Add it on 500GB hard drives and put them on top of each other, and the pile will then exceed eight times the height of Mt Everest. You can only imagine how tall that stack would be now that 2021 has also begun. Thanks to Big Data, Amazon has a pretty firm grasp on its KVIs– known value items–the products that poorly drive the value perception among customers. In a grocery store, the KVIs are eggs and milk. For Amazon, these KVIs might be games consoles or TVs. These products tempt the customers in, create an overall sense of economical pricing, and also encourage them to spend more on the pricey peripherals and other things they never knew they needed. Strategically increasing the prices of low-demand items for making popular alternatives seem cheaper is one more strategy that Amazon has been accused of doing in the past. Amazon’s dynamic pricing is so advanced that a mini-industry of the Amazon price tracker apps has sprung for helping consumers navigate the different terrains of the ever-changing pricing landscape. CamelCamelCamel is the best known and definitely the most perfectly named.

3. The 10 Benefits of Dynamic Pricing Software Massive companies like Amazon have spent billions of their dollars in developing dynamic pricing software eCommerce and strategies that are available to small- and medium-sized businesses for a pretty modest investment. Companies get their best bang for the buck by implementing a CPQ (configure, price, quote) solution like KBMAx, which gives dynamic pricing alongside the product configuration, sales and engineering document generation and overall functionality. Benefits of dynamic pricing software include: First and foremost, you can increase your revenue, profit, market share, or whatever you wish for, from your pricing strategy. You can continue with the rise of seasonality as long as possible, adjusting the prices incrementally to generate every last cent from your busiest periods. It can also serve as an early warning system for all problems that are coming down the pipe, like overstock and understock. It analyzes the buying behavior, teaching you about the customers’ habits and preferences, helping you to better meet their needs and customize products, services, sales, and marketing accordingly. Price crawlers usually track and analyze the competitor behavior, providing a deeper understanding into their strategies and motivations, showing you what to do and what not to. You can also eliminate human pricing errors. Never again will the incorrect prices slip through and go live, that bring lost revenue and even awkward follow up calls. It saves time, freeing the employees from countless number- crunching, allowing them to concentrate on more creative and strategic pursuits. It can model the pricing rules in different scenarios, showing you how different pricing strategies will play out before risking them in real life.

4. It can predict the future demand and its price elasticity for every product and boost the decision-making through data-driven analytics, getting even better over time. You can then shape customer behavior by changing prices through different channels and locations, driving in-store traffic, or even promoting new product launches. The future of dynamic pricing lies in personalization. Dynamic pricing software can even plot unique demand curves for each customer, customizing the buying experiences, prices, and offers accordingly. Just Because You Can, Doesn't Mean You Should If (comp_price>cost) and (promo_flag = false) then set price = comp_price*0.90 There are two huge risks present in dynamic pricing that need to remain on top. The first one relates to the competitors, while the other one to the customers. If you happen to understand the standard pricing algorithm above, then it should be alarming enough. It means: “If the competitor’s price is greater than the cost of making the item, and the competitor isn’t running a promotion, then undercut the competitor by 10 percent.” While beating the competitors on price is no bad thing, how can you be so sure they don’t have the same algorithm that’s at you? They probably do! And that can only mean a race to the bottom with no clear winner. The other factor to consider is consumer trust. Specifically, how to keep it when your prices differ all over the place and you could then be charging one customer 10% more than another. The perceived price gouging can trigger a customer backlash from which it can be hard to recover. In some jurisdictions though, the dynamic pricing strategies can be illegal. Companies walk a thin line between the improvement of margins, retaining the customer loyalty, and staying competitive. It's up to you to decide.