In Dynamic Pricing, the pricing decision is based on your collected data on the one, and Artificial Intelligence on the other hand. Adding input variables like the weather, customer behavior, basket value and competitors the technology will predict the optimal price for your Key Value Products. The optimal price can be a relatively high one, such as depicted in the graph above for ‘customer A’; or a lower one for ‘customer B’. ‘Customer B’ may already have certain items in his basket; and offering the product at a lower price will most likely motivate him to convert, which will increase his order value and therefore your turnover and overall margin.
A company that is already well known for using Dynamic Pricing is Amazon. If they want to sell a microwave, for example, the price of the same microwave is changed several times a day. This way the buyer sees a different price in the morning and in the evening. This principle is called Dynamic Pricing. If at the second visit the price is slightly lower than the first visit, the buyer is more likely to buy the product. But this also works the other way around. For example, plane tickets are often more expensive with each visit to the website. This makes it easier for visitors to buy the tickets since otherwise it only costs more. Dynamic Pricing. The Artificial Intelligence solution that can increase your profit