Dynamic pricing - what is that?
Dynamic pricing or dynamic pricing is a central tool in the pricing policy of companies. In principle, they are free in their pricing and adjust product prices to the market situationto manage sales. As is well known, the top rule is that when demand increases, the price also rises. If demand is low, the price falls. This can be due to various reasons:
Time-bound prices fluctuate depending on the season, for example. This can be the case with clothing or even with Rail and flight tickets, which in the school vacations become more expensive. But also external market factors may affect prices if Raw materials scarce and therefore more expensive are. The product price must then be increased by Self-costs to be able to cover. Gasoline prices can therefore rise again and again. However, the price can also fluctuate depending on the day of the week or time of day.
Companies can also use individual prices work. This means that they usually carry out customer analyses in order to for different people Set different prices: If consumers are willing to spend more money, they are shown higher prices. In addition, it is common for groups of people How to reduce prices for students or trainees.
In addition to gas prices as a prominent example, the pricing of concert tickets brought into focus. It is not uncommon for organizers or ticket sellers to charge four-digit prices when demand is very high.
How do algorithms determine the price?
For the continuous adjustment of prices Is it common to use machine learning or Machine learning where the Algorithms analyze customer data and recognize patterns, on the basis of which they determine demand. They can also analyze inventory levels and competition to increase or decrease the price accordingly. The use of artificial intelligence is particularly worthwhile for personalized prices.
Can dynamic pricing be circumvented?
As I said, prices can fluctuate depending on the time of day. People typically shop more in the evening — you can expect higher prices at this time. It should also be noted that Prices must be transparent. Since May 2022 Buyers must therefore be notified when they are shown a personalized price. In addition, prices must not discriminate against anyone based on gender, age or place of residence.
