A long time ago, in what in many ways does seem like a different galaxy, you could poke your head into a competitor’s shop down the road and see how your prices stacked up. That day is long behind us. For a while, it even looked that the idea of owning a small retail business was going away for good as all the big box stores began to move in. Many theorized that these trends would continue to their obvious conclusion.
Technology appears to have pulled a proverbial rabbit out of the hat. The rise of independent e-commerce sites coupled with advanced software has led to an entirely different future on the horizon. Many small businesses are able to effectively compete with the bigger stores using a streamlined business structure coupled with the implementation of the latest in pricing and sales efficiency software and optimization of product assortment planning, as offered by UpstreamCommerce.
This advanced software is a bit of a double-edged sword, however. While it levels the playing field between the big and small stores that utilize it, those that don’t are quickly falling behind. The technological advancements causing the most significant changes in the landscape are predictive and dynamic pricing.
Use All Available Tools to Your Advantage
The use of dynamic pricing has already been widely implemented by the major online retailers, Many of the larger stores use advanced decision making tools to tweak their prices dozens of times a month. Some products on Amazon shift prices every ten minutes or so. No single person, or a team of people, could keep track of all the variables that go into deciding what the most competitive and profitable sales price would be. That’s where the software comes in.
Dynamic pricing software compiles data from countless sources and matches them to past trends and buying habits for that demographic. It looks at numerous variables it deems relevant. The result is a pricing strategy that is continually updated – built around maximizing competitiveness and profits.
The online world is extremely cut throat due to not only the widely available technologies, but also due the range of expertise online entities are adopting: from online marketing to presence on social networks, from influencer marketing as detailed by eTraffic in their article: Best Strategy for Content Distribution? Go Organic.
The consumer’s ability to measure up dozens of competitors instantaneously. Dynamic pricing allows businesses to ensure they will maintain an aggressively competitive price at all times while maximizing their profits as demand rises.
So let’s delve a little deeper into what Dynamic and Predictive Pricing actually are, and how you can implement them.
The successful addition of a predictive pricing model can create a quick increase in sales as well as increased margin enhancements. Predictive pricing uses a series of data points such as past trends and recurring patterns and matches them to competitor offerings, and market demand and supply.
The output of all of this data is a prediction on the impact of pricing strategies, in addition to sniffing out opportunities that may be arising within your customer base. Some software even looks at your consumer’s buying habits and offer predictions on what actions they may take at certain price points or in response to a particular set of bundle offerings or discounts.
All together software of this type has the ability to completely restructure the offerings and sales strategy of a business into something much more effective and efficient. There are many pieces of software out there that provide different levels of predictive pricing. I encourage you to look into which one may be best suited to your business and market.
Dynamic pricing generally refers to a number of pricing strategies that take advantage of your company’s unique place in the market, and those who buy it. Simply put, it means applying a highly flexible price to your products that are adjusted based on a series of factors.
The best dynamic pricing solutions will allow you (or will automatically) adjust your prices depending on things like where the buyer is from, the time of day, the level of demand and what your competitors are pricing it at. The software is made to juggle these factors (multiple times a day in most cases) to present your target market with the most competitive price at all times.
There are many specific dynamic pricing strategies, and the ones you implement will depend heavily on your industry. Hotels, for example, are widely known to utilize time of purchase pricing to fill more rooms when demand is low and to get the most profit out of each room when demand is high.
If you want to survive in the constantly expanding online markets and stand out from all the noise, you need to invest in dynamic and predictive pricing solutions. To fail to do so, or to attempt to do so manually, risks your business ability to attract customers and to stay competitive in the marketplace.