![]() Olfin Car decided to use Keboola to automate the process of price determination. ![]() Both market demand and supply were fluctuating drastically, shifting the price point of the same car model by disproportionate margins. With the change in the global supply chains, Olfin Car struggled to understand how to price its product. Olfin Car is a leading seller of new and used cars in the Czech Republic with additional services in the field of financing, authorized car service, and insurance. Dynamic pricing helps you identify that sweet spot where both are maximized.Įxample: Olfin Car’s data-driven price adjustments drive higher revenue Lower your product price point and you get a higher market demand, more purchases, and increased revenue while also cutting into your margins. Revenue and profit margins are often hard to grow side-by-side. So what business outcomes can you improve with dynamic pricing? The 3 business goals you can achieve with dynamic pricingĪ successful dynamic pricing strategy can help you: On the other hand, the machine learning approach is harder to implement but it’s more cost effective. The rule-based approach is usually easier to implement, but it reaps fewer benefits. Algorithmic approaches test different price points and optimize the price elasticity to determine the best price point for your products. Machine learning or algorithmic dynamic pricing approaches let a statistical model decide what is the ideal price point for your product pricing.For example, we could make a rule saying “When the competitor’s price for product X falls by 20%, lower our price point for product X by 10% to keep us competitive”. Rule-based dynamic pricing approaches incorporate human-made pricing decisions into their pricing point estimates.In general, we can classify dynamic pricing implementation strategies into: There are many different types of dynamic pricing that differ based on the implementation approach and implementation goal of your dynamic pricing strategy. Two approaches for implementing dynamic pricing Unlike variable pricing, fixed pricing offers set prices for products or services, irrespective of market conditions. The changes can be in real-time or they can happen over days.įor example, a pricing engine on an online retailer’s e-commerce site adjusts prices every minute to reflect fluctuations in customer demand.ĭynamic pricing can be used to chase multiple business objectives:ĭynamic pricing is often contrasted with fixed pricing. A dynamic pricing model (also called a surge pricing model) is a pricing method that changes product prices to optimize a business objective in an ever-changing market.
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