Dynamic Pricing Explained

Dynamic pricing is a trend that has taken eCommerce  by storm. Though not a  new concept, many giants have been using it for years and it is becoming more relevant to more industries.

Dynamic Pricing is a strategy in which product prices continuously adjust, sometimes in a matter of minutes, in response to real-time supply and demand.

Amazon is one of the largest retailers to have adopted dynamic pricing; they update prices every 10 minutes.

Dynamic pricing is based on real-time changes to product supply and demand. It takes into account the price fluctuations in the market, monitors competitor activity and individual product demand and supply.
As a result, it gives eCommerce retailers the right data and information that can be used to set optimal product prices and stay profitable despite the price fluctuations.

Monitoring hundreds of thousands of products and keeping an eye on the real-time supply and demand trends is a highly complex and challenging task, beyond the scope of most eCommerce businesses. However, it can be easily managed with the right software. There are many web-based applications designed to monitor, calculate and manage dynamic pricing models based on real-time supply and demand trends.

eCommerce retailers continue to grow at a record pace and with increased competition, they face the tough challenge of maximizing profits while keeping prices competitive. Dynamic pricing is the ideal solution to this problem. If implemented for a sustained period, this pricing strategy can significantly boost overall revenues and profitability.


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