What is dynamic pricing?
Dynamic pricing is a strategy in which the prices of products or services are constantly adjusted based on various factors, such as supply and demand, competition, market trends, and even consumer behavior. Rather than having a fixed price, dynamic pricing allows companies to respond flexibly to changes in the market, meaning prices can rise or fall depending on circumstances. This makes it possible to maximize profits by, for example, raising prices when demand is high, or lowering them to attract more customers during quieter periods.
In the e-commerce world, dynamic pricing is often driven by advanced technologies such as machine learning and algorithms. These tools analyze large amounts of data, including historical sales data, competitor pricing information, and inventory levels, to calculate the optimal price for any product at any time. This allows companies not only to react quickly to market fluctuations, but also to anticipate future price changes. Dynamic pricing can even take into account individual customers' behavior, such as their buying history or browsing habits, to offer personalized pricing.
In practice, dynamic pricing is often used in conjunction with SEA (Search Engine Advertising) and other online marketing strategies. A good example is the use of a product feed that is automatically updated with the latest prices, so that platforms such as Google Shopping always show the most up-to-date information. For effective dynamic pricing, it is important to have your feed management and inventory management in place so that price changes can be made accurately and quickly. A best practice is to regularly evaluate the performance of your dynamic pricing strategy and adjust as needed. This helps not only to maintain your competitive advantage, but also to increase customer satisfaction by always offering the most relevant and attractive prices
