Dynamic Pricing is the practice of setting a strategic price for a product or service, based on current market demands. It helps business in deriving an optimized price based on current needs and also helps bring customers consistently, in many industries.
How it Works?
Basically, the common factors for fixing a price are Demand, Competitor Price and Cost. But, manually monitoring these factors is really hard and that’s the reason for fixed pricing method on most products.
Fortunately, with the advancement of technology one can build Machine Learning and Advanced Time Series Forecasting models, to understand the market demand in advance, with almost perfect accuracy based on Macro-Micro Economics, Seasonality, Trend and other KPIs along with competitors' price, with complete automation.
Industries should think of Dynamic Pricing:
Setting a less price(optimized) on less demand days will yield more passengers/ customers/ users etc.
1. Transportation (Airlines/Bus): Can set optimal travelling fares
2. Travel & Hospitality: Can set optimal room fares
3. E-commerce - Product price optimization
4. Entertainment - Optimizing movie/ event/ sport ticket prices.
It’s better to sell 20 tickets with the price of $5 than 5 tickets with $10, when the operational cost is same. Dynamic price will always keep you alive in the competition.
Interested in setting up Dynamic Price strategy for your business? Write us to at firstname.lastname@example.org.