How to Price Your Items and Services Dynamically

Written by on 25th October 2019

Pricing strategies are ever-evolving, much like everything in this world, which is why dynamic pricing is key if you want to thrive. This price-setting method uses both data analysis as well as adaptability since it revolves around altering product prices based on past customer behavior. For instance, in order to create the most personalized offer, information such as previous searches and purchases are collected. While this isn’t an entirely new idea as it had been used in the past by fields such as hotels, event tickets, and airlines, to name a few, it is now embraced by so many others. After all, dynamic pricing has proven to boost conversions, thus raising revenue.

Take, for example, airlines. American Airlines, in particular, was the first to use it back in the 80s. Initially, many frowned upon the method until they started to take over the industry. As more joined the trend and as technology started to become more advanced, the ecommerce world has gradually begun to embrace it as well. That being said, dynamic pricing hasn’t stayed stagnant all these years. On the contrary, it has evolved over the years, along with technology; that way, companies can offer more relevant pricing as more time passes. But how does it work exactly?

Dynamic pricing offers firms the ability to easily change their prices based on the evaluation of the market. This way, you are always updated about trends in the market, ensuring that your revenue will increase. It is beneficial because you have more control over your prices, you have much more flexibility, you are able to save more money, and you will have a competitive edge over the other firms in the market. It is recommended, however, that you do not overuse different types of progressive technology that you will find in dynamic pricing solutions as it could cause you to lose authority over your entire firm. Now, today, there are many different kinds of dynamic pricing software that you can use today so that you can watch your sales skyrocket along with your revenue. Down below, we have outlined a few of them.

Penetration Pricing

Use this method when you are planning on putting out a new item on the market. Since you don’t know how well your item will do in the particular market, it is recommended that you begin by analyzing it and then setting a price that is lower than that of your rivals. This way, you can dip your toes into the market safely, knowing that you will be able to bring in some customers based on the price. As soon as you’ve got a good grip in the market, you can begin to raise your price.

Segmented Pricing

This strategy revolves around dividing the item depending on the amount that shoppers are willing to pay for the features, quality, or the warranty of it. It is one of the most effective as it boosts your conversions, thus increasing your profits earned. This is best accomplished by putting out a range of options for one item that way, there are more choices available, catering to a broader audience.

Time-Based Pricing

This is an excellent method to utilize when you already have some customers that are purchasing your items. You have probably experienced this first hand when you were booking plane tickets or hotel stays. Indeed, the longer you don’t end up making a purchase, the higher you can expect the prices to be. This often occurs in these kinds of industries because trips are more set in stone; therefore, customers are willing to pay a bit more to ensure they get the journey that they planned. As a result, the earlier you know your bookings, the more money you will end up saving. This strategy is also often used for shipping because many people are willing to pay more in order to get their packages faster.


This pricing strategy is especially prevalent in the ecommerce world because it revolves around establishing prices based on the demand of items. For instance, when demand is high or your rivals’ are low in inventory, your prices will increase. Prices will decrease if the opposite occurs. As a result, through this method, firms end up raising both their profit margins and their revenues.


Being a consumer yourself, you’ve probably noticed that purchasing a winter jacket during the wintertime will cost more than in the summer. This is precisely what exactly revolves around. In other words, when a customer desires a product more during one time than another, increase the prices during the time when there is a much higher chance that they will make a purchase. Keep in mind, though, that you don’t make it way more expensive than it has to be. That being said, we do also recommend that you do a bit of research that way, you know exactly how much shoppers are willing to pay that way you end up making the most that you can.

Hopefully, you are now convinced that dynamic pricing is the way to go. Use this to begin your search for the type of method that would go hand-in-hand the best with your firm’s wants and needs.