Dynamic pricing taps into the price elasticity of demand – the price sensitivity of consumers – and maximizes revenue by either lowering or raising the price. The model is built to drive volume at all times, and does it as efficiently as possible.
The dynamic pricing system optimizes prices according to all available data, optimizing for everything from current demand and supply to competitors’ prices and significant future events. That pushes up profit.
If wanted, the dynamic pricing model can attempt to find the optimal price point for each consumer. In the process, it uncovers considerable customer insight – rare analysis that can help inform wider company strategy.
Automation allows pricing teams to respond to rapid fluctuations in demand in real time. That leaves more time for the important strategic work of what to sell and when.