Dynamic pricing is a game changer in the business world. It alters a product’s price in response to changing market conditions. The array of benefits it brings has done wonders for companies who have implemented it in their strategy.
It is a fancy way of saying that prices can change based on different factors. It’s like when you see the price of a flight ticket change depending on the day or time you want to fly. Airlines have been using dynamic pricing for a long time to fill up their planes and offer different prices to different passengers.
But it’s not just airlines. Amazon, Airbnb, Uber, and many more giant brands uses dynamic pricing.
The Wrong Perception
There’s a misconception among consumers about dynamic pricing, thinking that brands only use it to make more money. Well, yes, businesses do aim to protect their profits because that’s how they survive. But here’s the thing, they also want to give customers a good deal and offer competitive prices.
It’s not all about squeezing extra money from customers. Businesses understand that customers appreciate affordable prices. They want to make sure that people can buy their products at a price that they find reasonable and valuable. So, while they do consider their bottom line, they also strive to find a balance where customers benefit from a fair and appreciated price point.
Dynamic pricing is a customer-centric approach that places the customer at the centre of the pricing strategy. It is actually a fair way for businesses to set prices based on different factors like demand, competition, and availability. It helps them adjust prices to match what customers are willing to pay. This means that sometimes prices may go up, but other times they may go down too.
The important thing to understand is that dynamic pricing is not meant to take advantage of customers. It’s just a way for businesses to respond to changes in the market and make sure prices are reasonable. It also benefits customers by offering discounts and deals when demand is low or providing more options during busy times.
As an AI-powered dynamic pricing company, Sciative believe it is crucial to shed light on the social impact of dynamic pricing. Our AI-powered tool Viaje.ai has revolutionized the way businesses operate, offering numerous advantages for both companies and customers.
Reasonability and Affordability
Dynamic pricing makes products and services more reasonable and affordable for consumers. By adjusting prices based on demand, businesses offer lower prices during off-peak periods, making products more affordable for a wider range of customers. This ensures that even price-sensitive consumers can access desired products and services.
Allocation of Resources/Capacities
Dynamic pricing enables businesses to optimize the allocation of their resources. By adjusting prices based on demand and supply fluctuations, companies ensure that their products or services are priced appropriately to match customer preferences and market conditions.
Let’s take an example of a travel company. Dynamic pricing allows bus travel companies to optimize their seat capacity by adjusting prices based on demand. By increasing prices during peak periods, businesses influence customer behaviour and encourage them to shift their purchases to off-peak times. Get more understanding on this from our latest article.
While businesses strive for flexibility in pricing, they also encounter constraints imposed by government regulations. These constraints establish certain limits on price fluctuations. Dynamic pricing navigates these government constraints while also aiming to remain competitive and profitable. They always follow the state control.
Customers should not feel tricked or taken advantage of , as long as they are getting a fair price for a product, and there’s transparency behind why prices are what they are.
No Demand Period
During periods of low demand, businesses offer discounts or special promotions like early bird sale to attract customers. These discounts provide customers with the opportunity to purchase goods or services at a lower price, allowing them to get more value or additional benefits for their spending.
Businesses implementing dynamic pricing ensures that consumers can access products and services at various price points. This means that individuals from different socio-economic backgrounds can find options that fit their budgets, making essential goods and services more accessible to a wider audience.
Dynamic pricing is the future. Consumers have a wrong perception that they will have to pay more when a brand is using dynamic pricing. Prices become more reasonable when dynamic pricing is applied in a brand.
“Dynamic pricing is not about making you pay more, but rather about offering fair prices that reflect the current market conditions. It’s a way for businesses to be more flexible and ensure that you get the best deal possible. Remember, perception can sometimes be different from reality, and in this case, it’s all about making prices more reasonable for you”.
To know more about our AI-powered dynamic pricing tool BRIO, reach out to us.