More than 85% of people claim that pricing matters for them to a great impact while they make decision of purchasing.
Pricing optimization model is not a simple task and this kind of modelling have many factor branches like forecast demand, develop pricing and promotion strategic control stock levels and improve customer satisfaction.
The quality to price optimization doesn’t wrong in the speed of price changes, it can be lies in the accuracy and calculation of data.
1. Use Accurate Competitor Data:- If you want to maintain a good dynamic pricing strategy you have to start with your competitor data. The competitor pricing data helps you established the better range of price you can use to stay competitive for a long period.
Sometimes, the uses of the competition data can be frustrating little bit because their data is always perfect and missing or incorrect pricing data. So, with the help of business analyst you can go a long way towards. Keeping your data accurate and ratifying or identifying illogical error.
For more reliable results collect as much raw data as possible, set up data cleansing and then feed the pure data to the algorithm for optimization.
2. Test your prices:- With you have this pure data, you can start working on the dynamic price for your products. You should keep in mind that behind every purchase decision. Many aspects determines the optimal price like brand value shipping costs, competitor price, price elasticity etc.
For you price strategies you can use A/B test. You can analyse how different prices affect your bottom price line, sales revenue and conversion rates and it also find how the dynamic pricing helps retailers or your customers.
When you find a price that wins a lot of sales for your product, you can not neglect your competitors prices at the time. You take note of it and if its higher, you can command a price premium.
3. Price should be Dynamic, Not Discriminatory:- Many businesses use demographics to determine price.
Instead of using one customer traits and demographics to price your products, the dynamic price help retailers by the market and war internal business strategy dictate and justify prices. The market factors will determine the final price, and it all up to you how you follow or alter it to make a sale.
4. Use High Pricing:- In the high demand situation you can take advantage of flu cation in demand by allowing peak pricing, when demands high and your competitors have low stock than you can increasing prices for your product.
5. Take your Time:- It can be strange for you (not dynamic at all) with price optimization take your time. To build confidence in your future pricing decision, you have to giving yourself time with each and every price change to measure the results, it will be the best way
Of course, it’s significant importance to move fast, but it continually changing your price to keep up with your competition can be detrimental.
It also helps you understand where you have pricing power and you can measure your product elasticities or where you ness to be more competitive to win over customers.
6. Road mapping:- Your developing time is limited. So, you have to spend your time wisely on features that will drive retention. Before you start building, you analyse your pricing data to drive your product roadmap by learning which potential features with attract to the many customers and generate the highest revenue.
Conclusion:- Dynamic price optimization model and pricing intelligent software allow you to analyse the competition and the whole market behaviour and incorporates other factors like level of demand and conversion level.
When it implemented in the right manner, dynamic price helps retains or customers by offering optimized prices in accordance with your brand without losing your margins.
Manufacturers and retailers of all sizes can grow with the help of data cleaning and price testing as competitive as Amazon while turning impressive margins. Now is the future of dynamic price optimization.
