With flexible or dynamic pricing, a business’s prices change based on the market. Implementing dynamic pricing comes with a mixed hand of advantages and disadvantages. While flexible pricing may be the right decision for your business, it is essential to take the disadvantages into account as well when deciding whether to implement it in your eCommerce practices.
Dynamic Pricing: Giving You Options
Dynamic pricing includes a variety of practices, which means that you can pick a model that is optimal for your company. You can adjust prices based on the needs of the market and of your own business, utilizing ERP tools to understand what is right for your company. You can also offer customer-specific pricing that bases your price-points on an analysis of each customer’s profile. Each business has the form of pricing that is right for its needs.
Adapt Your Prices to Your Business Needs
One of the biggest pros of using flexible pricing models is right in the name: the flexibility. These models give you the ability to guide your customers toward making choices that fit into what your business needs at that moment. For example, if you are low in stock on a particular item, you can raise the price of that item to decrease the demand and increase your profits. Or, similarly, if you are understaffed, you can raise your prices to adjust for the extra work more orders will require for your team. You can offer cheaper prices on products you want more customers to be buying, and raise the price of items that are in high demand in the marketplace. By combining knowledge of your own company's needs, the marketplace of your industry, and the way that customers behave, flexible pricing can give you an element of control over the transactions made through your eCommerce website.
Challenges for Your Business
Even though there are many advantages of flexible pricing, the practice also comes with a set of challenges. The need to constantly adjust your prices means that you have to spend a lot of time and money analyzing what your prices need to be and adjusting them accordingly. Flexible pricing also makes it harder for you to predict your profits and the resources that you have to work with. If you are considering adopting flexible pricing, be sure to think ahead about these considerations and how your eCommerce business can work around them.
Challenges for Your Customer
One obstacle to flexible pricing is its interaction with your customers. A large portion of customers use eCommerce with the priority of viewing your business’s prices, often to compare to other businesses. If you feature flexible pricing that is subjective or prone to changes, it is difficult for customers to be certain of what prices they will receive. Additionally, some customers feel that such pricing is unfair and may be turned off by the practice. While these challenges are possible to overcome, and are potentially not a large threat to your particular business, it is vital to keep them in mind as you design your eCommerce strategy.
Clarity Can Help
To build an eCommerce platform with flexible pricing that is right for you, or if you need assistance with implementing a flexible pricing model, contact us for a free quote today!