Dynamic Pricing is all about fast response. It’s about fast adjustments to changing parameters, such as consumer trends, competitor behavior, time of day, and much more. But can dynamic pricing help businesses who don’t require this kind of quickness?
The Furniture Buying Experience
As it turns out, there is such a thing as slower dynamic pricing. It exists because not all businesses require quick price adjustments. Sure, they require precise, personalized pricing that generates maximum revenue, but their environment, products and consumers dictate less frequent pricing adjustments.
Take furniture stores, for example. Customers shopping for furniture often purchase the item of their choice only after careful deliberation. Sometimes they’ll come in, see something they like, check out other stores, go home, and then come back a week later and make the purchase. The last thing they want is for the price to go up. And the last thing the store owner wants is for them to pay less on something they have already decided to buy for the original price.
Furniture stores are just one example of businesses that price their products based on the assumption that most customers need to think things over. This business environment is different from supermarkets, clothing stores, and even airlines. Their price optimization must be slower, yet still whip-smart and precise.
Slower Optimization Can be Smart Optimization
Furniture shopping may require deliberation, yet that doesn’t mean that furniture retailers can’t benefit from dynamic pricing. After all, to generate profit maximization, they must avoid pricing stagnation – just like all other retailers. But how can this be done?
The answer is: slowly and carefully. For starters, furniture retailers must establish a dynamic pricing strategy, which will feature a unique set of boundaries and key parameters. Examples of such boundaries and parameters include price changes on a small designated percentage of furniture items at any given times (while all other item prices stay the same). Furniture retailers can also set a ground rule that prices must remain the same for at least 7 days.
Fast Analysis for Deliberate Moderation
In summary, products and customer trends dictate pricing strategy. Dynamic pricing can make a huge difference, because it drives alertness, awareness and change even in environments that are less tolerable of sudden shifts. Dynamic pricing precision is always fast – even when its implementation is purposely unhurried.