Dynamic pricing: Dos and Don’ts
Price increase is a natural thing if there is a huge demand and less supply. But it's not only price increases always, dynamic pricing can lower prices too. There are also times when lower price causes increased sales, helping increase market share for the brand etc. There can be disadvantages due to dynamic pricing, but over a period of time, most of the systems achieves equilibrium.
Some of the things that we suggest while adopting dynamic pricing are:
Look at the product you are selling and customer sentiments
Some products need constant price changes and some don't. Look at customer expectations from each product. If this is not aligned and you are unable to measure as a seller, trust this action with an expert like uniQin.ai. Avoid opportune price hikes.
Test and Refine the algorithm
Test your recommendation algorithm in multiple datasets, time periods and scenarios. Let the experts do this. Do A/B testing also to make sure that algorithm works before rolling it out. (Read more about Dynamic Pricing algorithms here)
Give it some time
You will need to give 3 to 6 months time to see the algorithm in action. Let it take its due course. Be patient.
Don't just look at numeric pricing
Look at other offerings such as discounts, bundled pricing, offers, fees, seasonality etc. Take care of delivery charges, taxes etc. while pricing, customers look at the total money spent on an item, not just what they see on the platform ( in case of ecommerce).
Avoid price wars
Avoid going on a price war with competition by reducing prices real time, this is a never ending journey and it is doomed if you don't have deep pockets.
As most people shop online, retailers need to really refine their pricing capabilities. Otherwise, they could soon find that they’ve fallen too far behind more forward-thinking competitors.
Struggling to price your products? Book a demo with our pricing experts now!!