Gain More Success in Ecommerce Through Dynamic Pricing

If you would like to stay competitive as well as expand your company, you will have to reprice.

It’s no secret that today, every single ecommerce company is looking for dependable ways to make their firm better. They’ve tried everything from emails that are customized and segmented to top-of-the-line user experience. While everything that they have tried has helped improve their online business, there is another, less popular, but arguably more effective, way to increase success in ecommerce: having a solid pricing strategy.

Even though dynamic pricing software may not be an entirely brand new solution, retailers in the ecommerce world have only recently started to really use it. Before, they were just choosing their prices randomly and then they would change them by themselves. That won’t work anymore, though, since there is so much competition now. Therefore, with the help of dynamic pricing software, ecommerce retailers have been able to figure out just how useful it can actually be.

To put in short, dynamic pricing software allows you establish flexible prices while also taking into consideration the costs that you have, the profit margins you’d like, the market demand, as well as the prices of your competition. Therefore, your prices will be set at the right time based on the demand in actual time as well as based on what your competition is doing, all while also considering the objectives of your firm.

You are probably the most familiar with Amazon since they are so big in ecommerce retail, but this size would not have been amassed had they not started to update their prices every 10 minutes. By doing this, they have been able to boost their revenue by 27.2%. Walmart started to follow closely behind them after having taken advantage of dynamic pricing software as well. Indeed, today, they change their prices 50,000 times each month causing their sales to increase by 30% back in 2013.

Through this pricing model, retailers also get more useful information regarding industry trends. Indeed, before figuring out the best way to price items, retailers can try out various price limits as well as evaluate price elasticities. The best way to do so is through paid advertisements such as Google Shopping. Through it, they can get instant information about how online shoppers will react to your change in pricing. In addition, you can evaluate conversion rates, impressions, margins, as well as CTRs after having changed your prices. Indeed, with the help of those constant tests, you will be able to figure out the best price.

Dynamic pricing software is also incredibly beneficial for the fact that both your margins as well as your revenues will see large increases, conversion will get better, you’ll have better control over the market, you’ll be present in the price comparison engines, and you will be able to change prices depending on the season, the demand, as well as the demographic.

Types of Dynamic Pricing

As you can see, if you are an ecommerce store, it would be in your best benefit to give dynamic pricing software a try. If you use the best technology for you, you will watch your company reach heights that it has never been able to before. Keep reading to learn some of the types of dynamic pricing approaches that you could try out for yourself:

Demand-based Pricing

In the case that either the general or the seasonal demand for your item is not great, you will need to get rid of any of your extra stock that way you can lower your costs. In this case, retailers should drop their prices as low as they can in order to boost sales. However, if the demand in the market is actually high based on a seasonal effect, for example, it would be smart to raise your prices so that you can see your profits soar.

As you can see, through demand-based pricing, companies can take advantage of changes in demand within the market. For example, if the demand is high or your competitors are out of stock, raising your prices would be the best thing that you could do.

You can figure out which items your rival doesn’t have via competitor price monitoring tools such as Amazon Bestseller or Google Trends. Using these solutions, you will also be able to figure out the demand in the market as well as which items are the most popular during a certain period of time.

Time-based Pricing

This pricing model lets ecommerce retailers optimize their prices depending on the time of day or year or even the life of an item within a market. Take, for example, airline ticket providers. It’s difficult not to notice how ticket prices tend to be a lot higher during the holidays versus throughout the rest of the year. This strategy is also used whenever an item is no longer in style. For instance, Apple tends to mark down the prices of their older products whenever they come out with a new one so that they can increase the demand. Therefore, with the help of this approach, not only will you always know what’s going on in the market, but you will also know what it is that your competitors provide, allowing you to raise or lower your prices at the right time and place.

Competitive Pricing

Today, there are not only a lot of competitors within a market, but they are also changing their prices. As a result, it is incredibly important that you track their prices as well as make changes according to what they do. The thing is, though, if you deny them, while they won’t know where your price point lies, it will cause you to isolate yourself from the market. As a result, your conversion rates will be lower and margins will be much smaller which would negatively impact your firm. Therefore, due to price competition, you want to really pay attention to both how they manage their prices as well as how they optimize them.


Alex is a small business blogger with a focus on entrepreneurship and growth. With over 5 years of experience covering the startup and small business landscape, Alex has a reputation for being a knowledgeable, approachable and entrepreneurial-minded blogger. He has a keen understanding of the challenges and opportunities facing small business owners, and is able to provide actionable advice and strategies for success. Alex has interviewed successful entrepreneurs, and covered major small business events such as the Small Business Expo and the Inc. 500|5000 conference. He is also a successful entrepreneur himself, having started and grown several small businesses in different industries.