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Dynamic Pricing: The Pricing Strategy for Ambitious E-Commerce Sellers

Guest Blog Post by Martin Heubel of Consulterce

Have you ever logged onto Amazon, found something you loved but didn’t want to buy it right that second? You put it in your cart and come back for it later. We all do it. It’s like a shopping list for the modern day. Of things we need…and those we definitely don’t need. Oh, hello six-year supply of magic erasers for $14.99.

Upon returning to your curated cart of all things necessary and not, you may have noticed that the price changes almost every time you log in. What sorcery is this? Dynamic pricing.

And, it’s a tool you can easily use in your own e-commerce pricing.

The Profits

Would you be surprised if I told you that gross margins improve by 10% with dynamic pricing? And, it’s a trend to which most of your competitors are jumping on board. Price intelligence software is the magical money-making machine that allows for this margin-improving strategy. The king of all online retailers, Amazon, increased their profit by $44 billion (yes, billion) dollars last year alone using dynamic pricing. Do you want to know how? On average, their pricing changes nearly every 10 minutes. Walmart saw a 30% increase in sales after adopting dynamic pricing practices.

And, oh the data. Dynamic pricing allows you to gives quite the insight to what price points trigger your customers’ “buy now” fingers. Okay, besides the wine; we won’t talk about that. What this means is that before you are dead set on pricing for a product, you can experiment a bit. Find the price that your customers respond to the best.

The Science

But, how?

Price intelligence software is an automated scanner continually monitoring the competition on a variety of platforms. It in turn, varies the price of your product depending on changing marketing conditions. When there is more demand, customers may see a slightly higher price. But, not enough to set off any alarms.

Benefits of dynamic e-commerce pricing also allow for price consistency across platforms. In today’s market, having a diversified presence and platform variation is most often the difference between a sale vs. a flop. When you think you’ve found a great deal, you typically will check other places to find a product. Dynamic pricing with price intelligence software monitors across selling platforms to ensure you have the most accurate pricing across the board. Doing this manually could easily be an employee’s full-time job. With competition as dynamic as it is today, you can’t afford to spend precious time trying to get e-commerce pricing right every time.

About the author

If you want to get started with dynamic pricing, please get in touch with Martin, who is the founder of Consulterce.com. Over the last 4+ years, Martin has successfully developed and implemented ecommerce strategies for 100+ businesses of all sizes and industries. On Consulterce.com, he shares actionable insights that allow you to build your own successful ecommerce business.

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