Dynamic pricing adjusts prices in real-time based on demand, competition, inventory, and other factors. Common in travel and increasingly used in ecommerce.

Factors Affecting Dynamic Pricing

View Pricing Factors

Demand: Higher demand = higher prices
Competition: Match or beat competitor prices
Inventory: Clear excess stock with lower prices
Time: Seasonal, day of week, time of day
Customer Segment: Different prices for different groups
Purchase History: Personalised pricing (controversial)

Dynamic Pricing Examples

  • Airlines and hotels (yield management)
  • Uber surge pricing
  • Amazon (prices change millions of times daily)
  • Event tickets

Benefits and Risks

Benefits: Maximise revenue, stay competitive, optimise inventory. Risks: Customer trust issues, perception of unfairness, complexity.

Dynamic Pricing for Ecommerce

Most common approach is competitor price monitoring and matching. Tools like Prisync and Competera automate this. Full dynamic pricing requires significant data and testing.