Key competitors are those retailers whose price fluctuations significantly impact your store's sales. You can examine a few prevalent examples of such scenarios here: COMPETITIVE PRICING SCENARIOS.Īdditionally, here is an example of a dynamic pricing solution with highly adaptable settings: COMPETITIVE PRICING SOLUTION.Ĭomponent 3. In practice, any retail/ecommerce business deals with rather intricate pricing scenarios. While effective rule-based competitive pricing does not call for complex algorithms, the flexibility of settings is essential. There is an array of ready-to-use solutions and vendors offering tools for gathering prices from both brick-and-mortar stores and online platforms.Ĭomponent 2. Collection of competitors' prices (parsing) the most straightforward component. In terms of software, dynamic competitive pricing necessitates three components of varying complexity.Ĭomponent 1. If the updated price was no longer competitive and enticing, the dynamic pricing solution automatically removed the SKU from the "Secret Sale." This was preempting conflicts with customers who might argue, "You're offering me a regular price, not a special one! You're trying to charge me high by pretending it's a sale." For instance, when a product's inventory was depleted and the store received a higher-cost batch, the "Secret Price" was adjusted based on the new cost of goods to avert company losses. The website displayed the standard price, ensuring competitors remained unaware of the "Secret Low Prices" and mitigating the risk of initiating a "price war." Customers could view their personal special offers exclusively in their account, after entering the promo code from the invitation email.Ī dynamic pricing solution recalculated the "Secret Special Prices" fully automatically, adhering to complex and flexible pricing rules established by the store's pricing experts. ➜ Depending on their objectives, the companies achieve growth in profits, sales, customer loyalty, consumer traffic.ĭynamic pricing is based on two fundamental principles:ġ - Real-time sensing of demand, current offers of competitors, changes in the company's internal data, including the mutual influence of substitutes and complementary products.Ģ - Automatic price adjustments based on gathered data: prices are altered to ensure the company attains maximum profits (or the greatest feasible sales volume, if it is the set goal).Īn online garden machinery store launched dynamic personalized pricing within customers' personal accounts, dubbed "Secret Prices with a Promo Code." ➜ Algorithms flexibly and promptly adjust prices according to market changes (demand, competitive landscape, supply) and company's internal factors (cost prices, stocks, business strategy in a particular market). Dynamic pricing is a system of non-static prices that empowers a company to extract higher profits, achieve a greater volume of sales, and reduce direct losses (particularly relevant during periods of instability and large fluctuations in demand).
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