The secrets of dynamic pricing
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PA Consulting’s Michael Thompson, consumer pricing expert, discusses the secrets of dynamic pricing in an article by Jordan Wiklund in The Food Institute.
The article explains that dynamic pricing helps businesses maximise sales by changing prices based on supply and demand. It incentivises purchasing when demand is high and supply is low. Combined with customer data, dynamic pricing allows retailers to identify likely buyers and know which products to stock and when to maximise sales.
Commenting on this, Michael explains: “The closest in-application is to use dynamic pricing to reduce spoilage loss, which every food retailer already does with varying degrees of sophistication.”
He adds: “The emerging opportunity is to get smart and more effectively connect loss to promotional activity.”
Michael concludes: “The next nearest-in application requires a deeper understanding of your shoppers. If you can identify circumstances in which consumers value a product more, you can charge more under those circumstances. This goes better when the retailer provides an obvious incremental benefit with an implicit cost component, such as delivery.”
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