What is dynamic pricing?

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Few things contribute more to a successful business than a pricing strategy.

Having the best product is no longer enough. Smart companies are implementing strategies where prices fluctuate in real time. Everything from the time of day to competitor activity is what drives these fluctuations.

When things are hectic, prices may go up a bit, and when things are calm, they may go down a bit. The key is to stay flexible and go with the flow.

Now, why is this so important for online stores? Well, imagine this: the Internet is like a giant marketplace where everyone is competing for attention. Having the right pricing strategy is like having a secret weapon. It helps you stand out, attracts customers, and keeps them coming back for more.

There are a few different names for dynamic pricing: rising pricing, demand pricing, and time-based architect data pricing. In this approach, companies adjust their prices based on what customers want at a given moment.

A simpler explanation would be that it is a pricing strategy where the prices of products are constantly changing. Depending on the market in question, time intervals ranging from minutes to days are possible.

How does it work?
Comparison of static pricing (single price point) versus dynamic pricing (multiple price points) in terms of revenue and profit.
Image sourced from Devesh Sharma – LinkedIn

Imagine you own an online store that sells t-shirts . You decide to set a flat price of $20 for all t-shirts, regardless of factors like demand, competition, or time of day. So whether it's a busy weekend or a quiet weekday, the price stays the same.

Now let's move on to dynamic pricing.