Pricing Strategies
A GUIDE FOR PRICING STRATEGIES
Custom Dynamic Pricing
What is it?
With a dynamic pricing strategy, companies constantly adjust prices to maximize margins, conversion and profit. Most of the time, this is done automatically by smart software and algorithms. This process automates mundane pricing adjustments for pricing managers and enables them to spend more time working on more complex challenges and tasks.
Custom dynamic pricing software is dynamic pricing software specifically adjusted to the needs of an individual business. It used to be something for the largest enterprises, such as Amazon. But due to technological advancements, custom dynamic pricing has become available to a much wider range of companies.
To know more, you can head over to our pricing strategy guide where we took an in-depth explanation approach.
How to use it?
A Dynamic pricing strategy is the most advanced level of pricing you can achieve but requires the most advanced software and knowledge to implement. The following are the most common use cases but you can apply custom dynamic pricing to fit your specific needs.
Automate time-intensive, manual-based tasks
Optimise your prices to the next level to increase revenue and profit
Respond dynamically to changes in the market
THE GAINS
Benefits of custom dynamic pricing
Boosting sales
Dynamic pricing is mostly associated with price increases. But the opposite can be true as well. Sometimes it becomes clear that you need to sell products for a lower price to boost sales and generate more revenue.
Maximizing profits
By adjusting your price with dynamic pricing software you make sure that you do not leave any potential profit margin on the table. By increasing the price slightly for certain products, you can sometimes increase your profit margins by 10%, 20% or even 30%
Providing insights
Dynamic pricing gives you more insights into the behaviour of your customers. By collecting and analyzing the sales data at different price points, you will get more insights into the optimal price for any given situation.
INDUSTRY TRENDS
Who is using it?
Amazon
The E-commerce platform is a classic example when it comes to custom dynamic pricing as they were one of the first to focus on this practice intensively. Amazon changes product prices’ on average every 10 minutes, to constantly offer the best possible price to its customers. Changing prices this often is not required for every business, but changing your pricing a few times per week can already lead to significantly increased business results.
Hotel Platforms
These websites also have their own custom dynamic pricing software to offer the best possible prices for their products to their platform visitors. The custom dynamic pricing software of these companies often reacts to factors that change the demand for rental hotels or apartments such as seasonality, holidays or scarcity.
B2B companies
Small and medium-sized businesses are increasingly using their own custom dynamic pricing software to increase their profit margins and revenue. For example, they automate price changes for changes in different factors such as costs, to prevent inflation and supply chain challenges from impacting their profit margin.
HOW TO HANDLE THE CHALLENGES OF CUSTOM DYNAMIC PRICING PRICING
The most common challenges pricing managers face today
- With a manual pricing process, you can run into many issues such as too much time spent on pricing or pricing errors. However, by adopting a custom dynamic pricing strategy in the smart price management software, SYMSON you can automate your pricing process and reduce errors.
- Using conventional pricing methods or even updating your prices manually does not let you utilise the constant stream of sales data that can be used to optimise your prices. AI Price optimisation software such as SYMSON enables you to run an analysis on all your prices and focus on an increase in revenue or profit.
- Because of the rapidly changing market that exists nowadays, it is an increasingly challenging process to constantly update your prices. With the price automation software of SYMSON, you can track all the variables you have and the software will make automatic adjustments to your prices for you!
THE DISADVANTAGES
Disadvantages and how to handle them
Customers may dislike it
Customers want to feel that they pay the right price for a product. When they notice that the prices of products change too much they can start to feel taken advantage of. To prevent this from happening, businesses could communicate why prices change better.
People can outsmart the system
Once people understand how a dynamic pricing model works, they can start to only buy at the cheapest time to buy. This could potentially lead to losing profits. To prevent this from happening too much, businesses should make their dynamic pricing work effectively and coherently.
Potential for a price war
When multiple dynamic pricing models are focussed on being the cheapest, it can trigger a price war to the bottom. However, this is easily prevented by implementing business rules to always leave room for a certain profit margin. This way a price war to the bottom doesn’t happen.
HOW TO SET IT UP
How to implement custom dynamic pricing in SYMSON
SYMSON offers AI Pricing software to companies that want to power up their pricing processes and make their pricing more dynamic. The company offers pricing software, powered by AI and smart algorithms, that can be customized to the specific business needs of companies. Whether you want to use the 9 pre-programmed pricing strategies, create your own strategy with the pricing strategy builder, or get your own features, it is all possible!
Create a Pricing plan
Get Stakeholders involved
Configure your pricing algorithm & define business rules.
Test with small groups
Analyse & Learn
Re-run this process
THE KEY IS A COMBINATION OF STRATEGIES
Why combine with other pricing strategies?
A custom dynamic pricing strategy has many advantages, but it performs most optimal in combination with other pricing strategies. In a way, the dynamic pricing strategy empowers other pricing strategies to perform even better, by automating a lot of the manual and mundane tasks. For example, a dynamic pricing strategy is often combined with a competitive-based pricing strategy or a with an in-depth analysis of the price elasticities of different products. These combinations lead to better insights and eventually into higher profit margins and revenue.
Key-Value Item strategy
Learn More
GET A DEMO
How to use Genius Dynamic Pricing in SYMSON
How it works
How to combine different pricing strategies
How to get recommendations for the perfect pricing
How to track competitors
Summary
- Custom dynamic pricing software is dynamic pricing software specifically adjusted to the needs of an individual business. In the past, it was only available for large enterprises, but now also for small and medium-sized businesses!
- Custom dynamic pricing software boosts sales, maximizes profits and provides valuable insights into customer behaviour.
- Custom dynamic pricing software performs most optimal when it is combined with other pricing fundamentals such as competitive pricing or price elasticities per product.
The SYMSON Solution
Smart Algorithms
Use smart algorithms and intelligent pricing AI to predict optimal price points for your products automatically.
Every business case is unique and each pricing strategy is based upon different factors, which can be influenced by high inflation rates. Smart algorithms and AI are able to predict the most optimal price points for different products automatically, by using multiple data sources such as costs, weather, competitor prices, price elasticity, and more.
Every business case is unique and each pricing strategy is based upon different factors, which can be influenced by high inflation rates. Smart algorithms and AI are able to predict the most optimal price points for different products automatically, by using multiple data sources such as costs, weather, competitor prices, price elasticity, and more.
SYMSON
SYMSON uses its in-house developed dynamic pricing software to optimise margins and to automate mundane tasks for pricing professionals. Get insights in your pricing management – from price elasticity per product to margin improvement advice and price automation with the Pricing Strategy Builder. For most companies, it would be advisable to look into cost-based pricing and price elasticity, to combat high inflation rates. However, every business case is different, and at SYMSON we provide custom solutions for all of our clients.
