Ever checked the price for a plane ticket and then came back the next day to buy, only for the price to have gone up? You've just witnessed what is called Dynamic Pricing.
In simple terms, dynamic pricing is about being flexible with your prices instead of keeping them fixed. Think of it like adjusting your thermostat: you turn it up or down based on how warm or cool you want your space.
It's most commonly seen with Airlines and Hotels, with prices going up or down depending on the time of year and/or demand. You can also see it at petrol stations, where they closely monitor each other's prices and adjust up or down to stay competitive.
In retail, this means changing prices based on things like demand, trends, holidays, or what your competitors are doing.
For example, clothing stores may increase winter clothing prices during colder and then offer discounts during summer.
Dynamic pricing sounds like something only a mega-corporation with unlimited resources could do, but that's not true.
Truth is, you are probably already exercising some degree of dynamic pricing without realising it, like running a sales promotion, or you may be increasing or lowering prices to match your competitors.
Here are some additional suggestions that you could do.
You can use your own data to see how your customers are responding to your products and prices. If you have access to SEO tools, then you can also look at what your customers are searching for. If you have a product in high demand but not selling well, then it's time to review your prices.
Spend time each week checking what your competitors are charging, especially for key products. If you see them discounting items, you could match their price.
The great thing about these suggestions is that you can do this today without any additional investment apart from a spreadsheet and a couple of hours each week.
Adjusting prices can feel time-consuming. Start small—try reviewing prices once or twice a month. Record them on your spreadsheet, and they'll add up over time. You'll have a nice, robust set of data you can use for your next pricing strategy.
Don't go all out and target your entire inventory. Keep it simple by focusing on just a few high-priority products to begin with, then build from there.
Keep your customers informed on price changes. Nothing kills trust faster than a business hiking prices for no reason, especially if it looks like you're taking advantage of your customers to make some extra money.
Dynamic pricing can initially feel intimidating but don't overthink it. Start simple—adjust prices for a few products, run some strategic promotions, and keep an eye on competitors. As you grow, you can get more sophisticated. The goal is to stay flexible, react to changes in the market, and make smart decisions without overloading yourself or your team.
With just a little planning and regular monitoring, even the smallest business can unlock the benefits of dynamic pricing and stay ahead of the game.