You probably heard of Uber, Amazon, and Alibaba. And you have likely used these companies before, either to go to a particular destination in your city (Uber) or probably bought something online (Amazon and Alibaba). But what do these three companies have in common? Yes, they are leading companies in their sectors and are crushing their competitors, but think more outside the box. Companies like Uber, Amazon, and Alibaba applied dynamic pricing. That is the key to their success and growth.  

Dynamic pricing is a strategy that modifies prices according to demand and supply, plus other factors. For example, if the request for a coffee mug is high on Amazon, this online retailer will raise the price because people are willing to pay more. On the other hand, if the same product is not selling, the price will drop. In 2013 and according to Profitero, Amazon made 2.5 million price changes daily.    

So, if big companies like these are using it, it is time for more businesses to join this trend, and this is why.    

1- The competition is getting stronger    

In 2021, it is almost impossible to think of a company that does not have any competitors at all. Therefore, you have to keep an eye on what your competitors are doing. Online retail shops like Amazon and Alibaba daily add new products to all their categories.     

If you are a small online retail shop, you need to be aware of any movements your competitors make. For instance, any new products your competitors launch to the market. Or why did they modify the price on a specific product or all their products? If you gather all of this information, you can respond to their actions by repricing your products and not be left behind.    

Using dynamic pricing has never been so important, especially in these last few years, because of the high number of people who choose to buy online. A Statista report stated that they are 2.14 billion digital buyers, 27.6% of the global population (7.74 billion people). That is why you need to offer consumers prices according to the demands of the market. Also, have to be quick to respond to any price changes your competitors make due to different factors. The faster you react to this, higher are the chances you increase your profit margins.    

2- Time and cost saver    

To make a price change, you need to check your competitors’ prices and look in the market to get an insight into everything. But, this task takes a long time to complete, and when are finished, our competition has new prices. You did all that work for nothing. Besides, since we are humans, there is a high chance that we make a mistake.     

Dynamic pricing software does this automatically and in lesser time. This software can scan many pages and many SKUs. Moreover, you and your employees can focus their efforts on other tasks, and the program is almost always mistake-free, so no need to worry about any incorrect data.     

Considering that the software gives you the correct information to set optimal prices on your products and still stay profitable by doing so, you will also save money in the long run and, even better, increase your profits and margins.   

3- Use of data    

Your company probably has a lot of data regarding pricing not used to the fullest. You may consider it useless, but with dynamic pricing, that is not the case.    

It is the opposite. If you feed the program with more information, it is better because the algorithm has more context for the products. That helps it come up with more effective and better price recommendations.    

Conclusion:    

Dynamic pricing allows retailers to fight against Amazon and Alibaba, two of the biggest online marketplaces in the world, and take some of their customers to their site. Plus, you can gain real-time insights into what your competitors are doing and take advantage of the opportunities the market is giving your company.     

Likewise, you will save time and money because the system does the price scanning quicker, and your team can do other tasks. Also, gain more revenue because the prices of products vary according to various factors.    

PriceTweakers is the perfect tool for your company because you can reprice your products and different pricing strategies based on the most accurate information regarding your competitors and the market. Learn more about dynamic pricing here. 

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