Definition of Predictive Pricing
It’s a strategy that is used to make assumptions on how competitor’s will price their items in the future. With the prediction made, you can price your item faster than your rival, taking the top position in the market.
Description of Predictive Pricing
This strategy is typically accomplished with the help of a price optimization software. It’ll allow you to continuously track all of your rival’s prices and thus, automatically change your prices before your competitor’s do, based on the prediction made from the past collected data.
Advantages of Predictive Pricing
This is an accurate way to get up in the market and beat out the competition since no human made error can occur. Additionally, you’ll have all of the data right at your fingertips within a moments notice, whereas if you did it manually, you wouldn’t have as quick of results.
Disadvantages of Predictive Pricing
If you don’t have a lot of data to work with, then the results you receive won’t be very beneficial. Additionally, the system itself is a bit of an investment, so you really have to think whether or not it’ll pay off. This often depends on the size of your company.