12 April 2018

Dynamic vs static pricing

For those managers that are running an online business, today’s competition price tracking is as important as taking the right strategic marketing decisions on the pricing policy in order to increase the business. One of the most common pricing strategies that online managers use is the continuous price variation, which is affected by the market and the type of user browsing on the website. Amazon is the most common example of this strategy, changing prices up to 8 times a day. This proves that the static price cannot be the right strategy to take if the goal is to increase business, because the value of the product changes every day and its price as a consequence.

Strong flexibility in the management of e-commerce sites and products in the online catalogue makes it possible to keep up with the dynamics of the markets. Dynamic pricing is a fundamental feature in today’s economy because the demand and supply are driven by price, so being able to change the price in real time or through structured pricing strategies allows you not to lose market shares.

Entering the market by using the right pricing strategy is highly important in order to properly evaluate both dynamic and static prices.

Static price

The choice of fixed price is certainly a very risky strategy to be pursued if you are running an e-commerce. Choosing not to change the price according to your market trends and therefore the competition may lead to an indefinite amount of lost sales opportunities. The fixed price is recommended when you are the manufacturer, which is able to establish a price that is valid for all kinds of customers.

Dynamic price

The dynamic pricing system is widely used by entrepreneurs who are selling online. It is useful to change the price of an item in real time and to be reactive to the demand from the market.
Dynamic price is the ability to change prices according to the behavior of the competition. It is a kind of strategy you must consider if you want to climb the peak of online competitiveness, because following the price of the best online competitors (where by “the best” we also mean the ranking value, not just the price), it contributes to the increase in the company turnover.
Thanks to the data obtained with Competitoor, we can say that more than 5% of e-commerce entities in Italy are actually using the dynamic pricing strategy. Not all the shops are using it, but those few that are able to put this technique in practice are really doing it right.

When you choose to automate the monitoring of online competition, if you want to apply a real winning strategy, re-pricing on your website is definitely the best choice. Competitoor aims to help e-commerce entities automate all the operations that are still done manually to allow the store manager to focus on other important activities.
Thanks to dynamic prices, combined with Competitoor price intelligence, you will have the opportunity to make the right decisions on which rules to apply and which competitors to follow.

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