In today’s ever-changing landscape thanks to endless advancements in technology, gaining a competitive edge is crucial. This is no truer than in the e-commerce industry. One of the latest trends in e-commerce is dynamic flexible pricing.
This is a pricing strategy in which flexible prices are set to reflect current market demands on the go in real time. Amazon is a prime example of flexible e-commerce pricing, updating their prices every ten minutes.
There are various benefits to using flexible pricing, especially for your e-commerce store. Keep reading to discover how you can benefit from flexible pricing and why you should use it for your e-commerce business today?
How does it Work?
The strategy of setting flexible prices in real time to meet market demand is known as dynamic pricing. Dynamic pricing works by monitoring prices 24/7 and adjusting them automatically according to real-time supply and demand.
With this type of flexible pricing, retailers will be able to gain insights they wouldn’t have otherwise. These insights allow retailers to test various different price ranges until the optimum market price is found.
There are many benefits to dynamic pricing beyond just being able to update prices in real-time. A few of these benefits are listed below.
Because flexible pricing allows retailers to monitor and adjust prices in real-time in response to supply and demand, retailers are able to set optimal prices. Setting optimal prices despite the fluctuations will allow your business to stay profitable.
When Walmart began using flexible pricing, they saw a 30% increase in global sales in 2013 with the trend continuing into 2014.
This pricing strategy also mitigates the need to outsource administrative duties associated with flexible price setting. This is because the system is managed by software.
Managed with Software
Since setting flexible prices based on real-time market demand, the need for software management is crucial. Mostly because being awake 24/7 monitoring market prices is detrimental to one’s health. Instead of software management automatically monitors market demand in real-time.
The process is entirely automated. The management software will not only monitor industry prices in real-time but will also automatically update your prices. Whether it is the middle of the day or the middle of the night, your customers will always get the most up to the minute prices. And you won’t lose out on profits.
Control Over Pricing Strategy
By engaging in dynamic flexible pricing, you will gain greater control over your pricing strategy. You will be able to gain insights into various different trends and behaviors across literally thousands of products.
This will enable you to set the right prices for your products allowing you to maximize on revenue and profits. While fluctuating prices can be difficult to account for, dynamic flexible pricing allows you to anticipate those changes and remain profitable.
Tactics to Get You Started
Here are a couple of different tactics to choose from when implementing dynamic flexible pricing.
This tactic for flexible pricing allows retailers to adjust prices according to the time of day. The length of time a product has been on the shelf is also considered.
With time-based pricing, retailers are able to increase the demand for an item by discounting it for being on the shelf after a period of time. This will help to free up space for new inventory as well as increase inventory turnover ratios.
Airlines and travel booking businesses are famous for using peak pricing. This tactic allows businesses to change prices based upon demand in real-time. If demand is high, then prices can be increased. Likewise, if a competitor’s stock is lower than yours, you can adjust your price accordingly.
Updating Your Pricing Strategy
Updating your pricing strategy and tactics is not an overnight process. It is best to research providers offering flexible pricing management software. Determine the needs of your company and the features offered by different vendors.
Once you’ve found the right provider that best meets your needs, you’ll need to begin formulating a strategy and choosing tactics. The benefits are certainly worth the thought and planning that goes into implementing flexible pricing. Increase your sales and profitability today by offering real-time flexible pricing to your customers.