Dynamic Pricing Strategies Help to Increase eCommerce Profits

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Craig Smith  |  Founder & CEO

Arie Shpanya explains in a recent article that eCommerce brands are increasing their profits by 25% when they use a dynamic pricing strategy.

Dynamic pricing is a strategy that involves a continuous changing of prices due to the demand for a product at that moment. For example, Amazon changes its prices, on average, every ten minutes to stay competitive with the rest of the market place. As a result, they saw an increase of 27.2% in sales from 2012 – 2013. Additionally, Walmart, Best Buy and Sears have also been known to use this strategy when determining the prices of their products.

For marketers, this means that we have to start thinking about the prices of our products a little differently. No longer can we just determine a price for a product and essentially set it and forget it. We have to have a real understanding of the market and the demand at a current time.

To do this, there is software that can be purchased that will scan Amazon’s prices every ten minutes and set our site’s prices accordingly. This might be a worthwhile investment as research has shown that this type of pricing strategy increases gross margins by 10%.

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