Dynamic Pricing in Retail
Definition of Dynamic Pricing
This pricing strategy allows for price changes during various periods of time for the same item or service.
Description of Dynamic Pricing
This pricing method is a type of price discrimination where prices vary based on the location of the shopper or the time of year, for example.
Advantages of Dynamic Pricing
You take advantage of certain times in order to make the most profit possible. When there isn’t much demand, then companies can lower prices just so that they at least sell off their item or service whereas when the demand is great, they can amp up the prices knowing that people will still purchase them. In other words, price flexibility allows you to make the most money that you can regardless of the situation.
Disadvantages of Dynamic Pricing
You may end up pushing away customers when they start figuring out that they, for instance, have paid more than someone else. Also, many people prefer knowing the constant price. You also need to have the funds for a good software that will continuously update your pricing on all platforms.