Using Dynamic Pricing to Maximize Ecommerce Profits

Fill Decision Making Gaps With AI-Driven Demand Forecasting, Dynamic Pricing Tech

It is not secret that today’s retail environment has radically changed into a highly competitive and dynamic market. And if this was a challenge for retailers in pre-pandemic times, it has only been intensified in the current climate of COVID-19, as personal and financial strains coupled with economic uncertainties have given a greater emphasis to prices in regards to retail shoppers.

Dynamic Pricing to Maximize the Profits of Your Ecommerce Business

The pricing strategy forms an essential point in any company’s marketing plan, since this can make a quality product either a success or a failure. Currently, there is an ever-increasing amount of competition, which is becoming increasingly fierce. Therefore, companies have to look for ways to be attractive to their buyer personas.

Price is a determining factor when it comes time to make a purchase, since it’s become very easy to compare prices online. For this reason, implementing a dynamic pricing strategy is essential to stay competitive and to know what the correct price is for your products. This type of strategy consists of making price changes automatically and intelligently, depending on how the different variables set by the company have evolved to customize the price of a certain product to the max. These variables can be related to supply and demand, actions carried out by the competition or internal decisions made by the company itself.

The Main Benefits of a Dynamic Pricing Strategy

Implementing a dynamic pricing strategy correctly will help you to protect the value of your brand, by knowing the exact moment at which you can increase your profits from the sales of your products or services. In addition, implementing this type of strategy is very practical and easy when it’s carried out correctly. With the help of price monitoring software, you can manage a large number of products at a time, modify their prices, monitor the competition, and take into account all of the variables that have been chosen. One of the most important benefits is that thanks to setting the correct prices, your ecommerce sales will increase and with them, your profits.


Thanks to dynamic pricing, you can compete on equal terms with giants like Amazon, for example, that have applied this popular strategy from the beginning, changing the prices of their products several times throughout the day. It’s now possible to monitor their prices and take these into account when determining what your pricing strategy is.

It will also help you to take advantage of the moments in which your competitors run out of stock. The demand will be higher, so it will be possible for you to set higher prices and, thereby, maximize your profits.

Tips for Implementing a Dynamic Pricing Strategy

The first and most important point has to do with the fact that if there’s no human team to validate this pricing strategy, it’s likely that unreasonable decisions will be made. For this reason, it’s essential to choose a tool that also has personnel available to advise you on its use at all times, in terms of both the strategies and decisions that are to be made.

You should also keep in mind that constantly changing the prices of your products can anger your customers and lead them to abandon your ecommerce business. All of the strategies that you carry out should be linked to the loyalty of your customers. For that reason, it’s important to control the repricing periods that happen every year.

On the other hand, increasing your prices excessively to take advantage of a dramatic situation is not recommended and can greatly offend your customers. Take for example the exorbitant increase in prices for hygiene and protective products that took place at the beginning of the pandemic in relation to the various products that were in high demand (masks, disinfectant gel, 96% surgical spirits). Even though the algorithm has determined that the prices for these products can be raised quite a lot due to the high demand, you must assess what you value more: an elevated profit margin or the trust of your customers.

In short, the most important thing to consider when it comes to using this type of technology is to do so in a reasonable way to increase your profits without taking any actions that could anger your customers as they have access to price transparency in an omnichannel market.

Antonio Tomás Pujante is CEO at Reactev, a dynamic pricing platform designed with state-of-the-art technology born out of Minderest, which has been a leading European company in price and stock intelligence for retailers and manufacturers since 2012. Reactev works with retailers to turn them into market leaders by combining AI with the most sophisticated price positioning algorithms on the market, which even allow it to make predictions for the future.

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