• Shivani Pai

How Dynamic Pricing Can Boost Your Online Retail Profits


How Dynamic Pricing Can Boost Your Online Retail Profits

Dynamic pricing has gained quite a lot of relevance in the e-commerce era, although it was still practiced by companies before. It is a type of pricing strategy where commodities prices tend to change as per the real-time supply and demand.


As an e-commerce owner, a dynamic pricing strategy finds more relevance than one believes it to have. For the success of a business, an e-commerce owner should price their products based on a variety of factors, including market demands, seasonality, etc. In an effective dynamic pricing strategy, an e-commerce business can reprice the products within minutes. It will make you triumphant over your competitor and drive in the customers.


However, this type of dynamic pricing strategy will not be as easy as it appears and will require specific skills to be advantageous for the business.


What is dynamic pricing, and how does it affect e-commerce?


Dynamic pricing, also known as surge pricing or time-based pricing, refers to offering goods at different prices according to the customers' demand.


The business owner can base the commodity price after studying the competitor's pricing strategy, the supply, demand and conversion rates, and sales goals.


Dynamic pricing also finds its application in the e-commerce market more in the current era. Because e-commerce is increasingly competitive, online retail owners should know how to track their competitors easily.


Also Read: Price Comparison On Amazon: How Web Scraping helps Companies win the e-Commerce Game


If one considers stepping into the e-commerce world, then it is a solid decision to adopt this pricing model. It holds a myriad of benefits for the business, of which some are below:


1. Greater command over the pricing strategy


As opposed to popular opinions, dynamic pricing does not diminish the control of a retail owner in deciding product prices. On the contrary, dynamic pricing gives the retail owners access to real-time market trends (demand and supply, price) for hundreds of products in the industry, including the competitor pricing. This information will help one to set the optimal prices for different products and increase the revenue.


2. No compromise on brand value


Dynamic pricing is something that not many e-commerce owners seek to adopt as they feel it could have the potential to damage their brand value and customer experience.


If you think that the constant change in the product prices will make your customer feel you are manipulating them, it is most likely not the opposite. Instead, this pricing approach can solidify the brand value and show your customer that the product prices are flexible.


Dynamic pricing can be used to launch seasonal and promotional offers.


3. Cost saver in long term


Dynamic pricing calculates the product price after studying the price variations in the market, the competitor's pricing, and the demand and supply of the products. With the data received from such research, online retailers will have a safety net by determining optimal product prices. The business will also stay unaffected by the price fluctuations.


Overhead costs considerably come down as the complex problems are done by pricing software and applications. In addition, it will eliminate dedicating extra time, money, and labor to manual calculations and other administrative activities.


4. The right software will also help in formulating prices.


It is an arduous task to monitor several products and focuses on the real-time supply and demand trends beyond the capabilities of most e-commerce businesses. But when provided with the right e-commerce software, it becomes easier to deal with this issue.


The software will automate the process so that a business can have accurate data to formulate or decide the pricing of the products.


5. Not completely accurate, but an option to rethink your strategy


Dynamic pricing is based on the demand and supply of products. When there is the matter of technology-based forecasts, there is also a possibility for errors in the results. However, if the pricing provided by the tool is not favorable, a business owner will remain in control over the decision-making. One can always review the prices that the application proposes.


Moreover, few of the leading online retailers have indicated that even if there is the likelihood of having errors, it is manageable. The inaccuracy will not have an impact on the profits since the pricing is dynamic.


A fine example of a firm that is a leader in dynamic pricing is Amazon. The ability of Amazon to constantly change the price of millions of items is a matter of great marvel. Although there are plenty of factors (customer experience, one-stop-shop, diverse product categories) that are the reason behind the success of the firm, one such factor that is often not talked about is the pricing algorithm Amazon depends on.


The e-commerce juggernaut is known to sweat out its competitors by slashing down prices while maintaining margins by making the less price-sensitive items expensive. The billions that Amazon reaps in profit demonstrate how dynamic pricing is a critical part of thriving in the e-commerce world.


Also Read: 5 Major Challenges That Make Amazon Data Scraping Painful


How to implement an effective dynamic pricing strategy?

It is clear what dynamic pricing is and how this pricing strategy helps a business work around the fluctuations in the market and remain profitable. However, it is also imperative to follow certain steps to ensure effective implementation of the strategy.

1. Pricing strategy and business goals

As the owner of your business, you should ensure the dynamic pricing strategy aligns itself well with your business goals. You should set pricing boundaries in a dynamic pricing model so that strategy does not go astray from your predetermined business goals and brand reputation.

For example, suppose a business wants to be an affordable service provider to its customer. Therefore, the algorithm should set prices so that minimums and maximums are below the average price point.

2. Consider All Pricing Factors

Businesses should set prices that are favorable in the long run as well. They should also set a price range for products that are sensitive to demand when laying down boundaries for dynamic pricing. Low prices can push the demand higher when there is a slump in the market, and in the event, the market picks up speed, you can reap profits with higher prices.

3. Competitors' Prices

Competitors' prices are important for the implementation of a dynamic pricing strategy. Making use of competitive analysis will help you to study which products are expensive and still attracting demand so that you can earn higher revenue as well.

With the product price now at a higher level, you can sell the products at a higher price and maximize your profits. For an effective dynamic pricing strategy, one needs to build an intelligent demand estimation backed up by competitor data.

4. Use reliable, competitive data

Reliable, competitive intelligence data is not easy to procure. Data mining is a tough job and involves a lot of time. With manual data extraction, there is a possibility of human error, and the prices would get outdated. Therefore a good pricing software will provide accurate results. Inaccurate data from unreliable software will lead to the wrong pricing of products, which will cost the business its customers.

5. Automate pricing strategies

Retailers can either choose to develop an in-house pricing tool or outsource this service that provides data through an automated method. The machine-based pricing algorithm will eliminate human interference. Further testing of pricing strategies through automated methods will also provide optimal pricing for the products.

How Web scraping can help you create a dynamic pricing strategy

A customer just does not randomly buy a given product. Instead, they conduct is a lot of research and browse thousands of products on different sites to get the best deal. To make a customer buy a product, the pricing on the said item plays a big role. To buy any product, a customer goes through different websites, checks reviews, and compares prices. Then the customer chooses to buy the most affordable product, which also has good quality. Understanding this customer mindset will help your e-commerce website to steer the business.

Discounts, seasonal offers will increase web traffic, and when you have access to competitor prices, it is easier to make pricing decisions. Web scraping product prices play a major role and help a business be aware of the pricing strategies followed by its competitor.

Web scraping product prices from different websites help a business to make an informed decision. For example, if a business is selling hair straighteners, scraping the prices of the same product across different websites will be done to know its market value to place an attractive price for the product on your website. As a result, you will be able to see customers come to your website when they find your prices lower than that of your competitors.


Real-time web scraping is vital as the data gets extracted as soon as it is updated, ensuring quick responsive action and better analysis. In addition, real-time web scraping does not have gaps in between sessions of scraping.

Price scraping monitors the ever-changing rates in your industry. Prices on e-commerce change due to various reasons, and it is important to look closely into these changes. The extracted price data will tell you about the latest prices, products, and other relevant details. It will also help you formulate a preferred pricing strategy. The scraped data will also help in the creation of a sustainable price strategy. But you need to consider the market you are in, the required profit, the prices your consumers will pay, the price charged by your manufacturers, etc. Keep these points in mind, determine your strategy.

By having data regarding industry prices, your negotiation capacity is superior. In addition, such data will help you get good deals from your suppliers. Therefore, scraped pricing data will help your ability to offer competitive pricing.

In the world of e-commerce, it is all about the numbers to gain a competitive advantage. Incorporating price scraping analytics can drive your business and make you emerge as a market leader.


Find yourself a pricing company or a data expert or simply get in touch with us at Datahut.


Related Reading: 1. Price Comparison On Amazon: How Web Scraping helps Companies win the e-Commerce Game

2. Scraping Amazon product listing: All You Need to Know

3. Location Intelligence in Retail: How Retailers Can Make The Most Of Location-based Data

4. How to Build a Winning Product Assortment Strategy for e-Commerce



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