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The art and magic of setting dynamic prices

The art and magic of dynamic setting prices

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No better than a flea market bargain in Sicily.


In fact, in this part of Italy, haggling is not considered unacceptable;
It is a sign of arrogance or even an insult.


Being Sicilian, I learned to haggle in my youth.
Seeing as my grandmother traders walked away from the stalls, taught me the ability to “improve offerings”.


Recognizing the opportunity, I began to conduct experiments only when visiting these markets.
For example, when I saw a product of interest, he walked to the position, ask the price and then I walked away pretending it was just something that caught my attention briefly. Just by doing that, I managed hundreds of vendors say “how much you want to pay?”


And that’s how I
learned to play with street vendors over the years.


In communities where people are old places, the rule remains the same and where prices are determined at the time, so a savvy trader needs to
be able to size your customers as they pass.    


When someone approaches the position and start haggling, he makes observations to find out
how to get the best price for their products.


In the world of retail, on the
other hand, we are used to have a universal price. But history has a strange way of getting around in circles and the days of having fixed prices may disappear as the market becomes the oldest and fluid model. 


In e –
commerce, this model is called dynamic pricing , and may reach its mature stage in 2016. 
If you’re not familiar with
dynamic pricing , it was first popularized in the airline industry. The ticket prices varied depending on several factors, including the date of purchase combined with the flight date itself.
Currently it
is not surprising that two passengers are seated together on the same back have a ticket with different prices.
How do these situations are engaged in e –
commerce? Find out.
The practice of dynamic pricing has become so common in the transportation and hotels, which already take for granted.
In other industries, however, this pricing strategy was not well received.
This is unfortunate because the
dynamic pricing should not necessarily work against the client because it is not always get the most benefit from each sale.
We will explain why in a minute, but first let ‘s
look at the different ways to implement dynamic pricing. Here are four common techniques: Maximum price: The price increase is a common strategy in the transportation industry. For example, airlines and train companies charge a higher price for travel during peak hours on weekdays and weekends at other times. The utilities also set their prices based on peak hours, as they can increase you the price on phone calls or light used from 9 am to 6 pm Time of Purchase: Some strategies of dynamic pricing offer to different customers prices based on the time of purchase. Airlines also use this type of strategy. The price of a ticket in economy class varies all the time. For example, if I return is near, the airline will lower ticket prices as you approach the day of the flight so that all the seats are filled, or otherwise raise prices of tickets economy class to class business is full. Changing conditions: Using strategies dynamic pricing can increase profits by market conditions. Fixed prices on products work best when there is great uncertainty in the market. For example, when the product has a short life, marketers can maximize profits by reducing prices when sales fall, and raise them again when there is more demand. Segmentation: Some clients pay more depending on the arrangement to pay for a service or product. For example, business people are willing to pay a high price for a plane ticket that allows them to travel midweek. Some customers may be willing to pay more for faster service, better quality or other characteristics.
Depending on the industry,
pricing strategy may vary. Disney, for example, often uses high prices. Airlines use high prices depending on the time of purchase. 
With the flexibility of retail online, the possible combination of strategies becomes endless.

The
dynamic pricing compared to static prices, it is reduced to a question of price range. With a fixed price, you have a price that remains until you manually recalculas or adopt a new pricing scheme through a board.
Dynamic pricing completely change the image.
Essentially, this means a multiple variety of prices instead of one.
Image via:
WISER
And by “multiple” we mean as
many as you need.







tecnicas_fijaciĆ³n price








precio_dinamico



This flexibility results in prices that can be sensitive to different market conditions, which is good for you and your customers.


To understand what meaning is in e –
commerce, we need to recognize what the most important player in the environment: Amazon.


In 2000, Amazon began testing with
dynamic pricing. These tests were not applied in all areas, but focused on specific products called DVD.

Declining prices of DVD affected more than half of the top 100 companies.
Depending on the product, prices ranged up to $ 15 dollars from one customer to another.


The result was the wrath of customers, partly because this test came just four months after a similar experiment that Amazon had taken Just over a popular MP3 player.
Customers who paid the highest price felt cheated and were not satisfied. 


So what criteria used to evaluate Amazon customers on the go?
We can not say exactly, but some of the techniques used by other traders are suggestive.

A WSJ report on Staples found that very often two clients show different prices based on their ZIP codes. If one of them was near a selling point of competition, such as OfficeMax and Office Depot, he was given a discounted price.

Optimization engines price Amazon is obviously more complex than the simple geographic orientation.
This is clear from the contantes variations given to one product and one customer at a given time.


Most Amazon customers who leave their carts abandoned for days products will eventually see a notification of change in prices on these items.

precios_amazon

Take advantage of tools like
CamelCamelCamel and witness this.  

Want to
know if you’re getting the best price for a
card PNY 128GB memory ? Look at this chart:
precios_amazon

Image via:
CAMELCAMELCAMEL
Uber , a platform that connects independent travelers nearby drivers, is the latest example of innovation of dynamic pricing

Uber operates in a very fluid market.
Demand for travel every day sees huge fluctuations while the number of available drivers is unknown, since drivers (partners-drivers) are free to work when they want.


In this kind of context, dynamic pricing is essential for the model to
work.


If prices are so low, socio-drivers will
not be motivated to drive. If prices are too high, customers will not use the service. Uber had to develop a way to bridge the gap between supply and demand under this chaotic condition.


To achieve this
, Uber created an algorithm “price increase” that works wonders.


But this does not mean that there
have not been problems. In 2014, during a
hostage crisis at a cafe in Sydney, prices Uber travel outside the area increased to $ 100, four times the minimum of $ 25. As you can imagine, the general reaction was of disgust. Uber published a tweet to explain the good intentions behind this mechanism:
tweet_uber

In its efforts to build a positive reputation in the eyes of the public.
Uber designed a system to inform the customer
increasing their rate real – time (dynamic rate), so that the company can avoid any feeling of foul play:
tarifa_dinamica

Image via:
LEN Musielak

Since then, the customer understands what you are paying and why, so you can appreciate the service.


A deeper analysis of the
price increase can be found by checking one of the many case studies there on the subject.

Up to
this point, you’re probably curious to know if suppliers who usually buy used
dynamic pricing . Here are some steps you can take to find out:

Each browser has its settings were when
a “user agent” it uses to identify itself to web servers. This tool shares information on the device being used and helps the content is visible and delivered correctly.


Most browsers give you the ability to override this setting.
In Chrome, for example, you can open the Tools screen and enter “device mode”. This will allow you to switch between the different agents and check the results.

agente_google

Another simplest option is to
check
pricing on a different device. If you’re browsing on a PC and have access to a Mac, check prices on both.

Since Mac users are known to have a higher than PC users, some traders have taken advantage of
the price difference to vary the family income.


If you’re browsing on a site that asks you to
enter your zip code so you can find your shipping area (to give that region related prices), simply change the setting to a different location.

cambio_envio

Find alternatives such as Google Shopping and compared.
This does not always indicate the existence of
dynamic pricing , but you can help.

Using a proxy server or VPN, you can change your IP address.
This is a bit random, but it is an interesting technique.


If this is the first time you’ve heard of
dynamic pricing , it could seem a misleading way to make extra money. Actually, this proposal has a wide variety of applications applied to both customers and businesses.  

Disney, for example,
has been talking about the price increase to the inputs of its theme parks. Is this an example of speculation, or is it something else?

If Yelp reviews can be treated as representative samples of customer satisfaction, it
is clear that customer complaints about the crowds are as common as those on high prices.


When asked about the parks and restaurants Walt Disney, President Bob Chapek said: “We have to find ways to spread our presence throughout the year, so we can give accommodation to the demand without being about to burst.”


According to Robert Niles:


“Whenever Disneyland increases the prices of their tickets, reporters asked if those high prices scare away fans.
[But] year after year attendance at Disneyland continues to increase, even with much higher prices. ”

The dynamic pricing can mean for Disney an increase in price, but that road can also lead to greater customer satisfaction in general.

Walmart changes its prices around 50,000 times every month for reasons such as their competence, traffic to their stores, the time of year and inventory.


But it is also representative of the way customers buy and data within their reach:

clientes_compra

Image via:
WISER

The free WLAN, which looks like a tool customer service actually serves as an indicator that determines how many users smartphone is in the physical store.
Besides being a router, you can monitor traffic, allowing traders to see these prices compared to applications that are in use. This can greatly influence the price of the store.


The
dynamic pricing may become a necessity in this industry because large companies are doing, responding to changes in the way customers buy.

Giants like Amazon and Walmart can develop engines price management for their companies.


But that’s about to change.
Here we suggest some steps to help you if you want to implement this:


The solutions are divided into three categories:


SaaS is the most popular because it allows merchants to
access a powerful data management software without spending your budget.


The third part of intelligence as
Wiser , Digonex and PROS are suggesting prices to merchants accessible for companies that are not leading companies, primarily leveling their field of work and allowing them to stay in the competition.

In this environment, you have to prioritize.


According to a
survey of RIS , companies listed the following as the most important determining price dynamics :
 lista_precios

Image via:
WISER

As you can see, not only is getting a strong gain influence the
pricing strategy dynamic . Factors such as market sharing a larger geographical location, inventory management, and the need to move product faster through a specific channel can have a significant impact.

What works for some may not work for others, and a variety of factors come into play to determine the optimal price: the value of the brand, the cost of shipping, reputation, etc.


This is where testing A / B becomes the key, allowing you to
analyze the impact of your dynamic pricing strategy in sales, conversion rates and your bottom line.


Shopify opens the door to your
strategy dynamic pricing . You can have a look at the applications store to get amazing solutions depending on your needs.
Darwin Pricing is an application that unlocks the sales potential for geolocation. Most solutions like Wiser and PerfectPrice are ready to complete the integration of Shopify.

The
dynamic price may soon become constant in e – commerce. And although the old style of selling price traders die out soon, your job does not have to disappear too. Dan Virgillito is blogger and writes to help startups to have more engagement through online content.  
Hi Dan, I have a question regarding prices Shopify.
I imagine you are changing the prices of my products alone, without my doing something. For example, something I got to $ 12, it is changed and appears on the page of my store that costs 3 dollars. I do not know what is happening. You know what can be the reason? Thank you.

dan_autor



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