Dynamic Pricing

Dynamic pricing varies the price based on the current supply and demand.

This pricing can be used to increase the price when demand is high and then lower it when supply catches up.

This is often used in ride-sharing services which charge more during the rush hour.

To use this pricing model consider the following:

Calculate the cost of delivering the product or service.

Never drop the price below the cost.

Determine your pricing strategy — market share, revenue generation, or growth.

This aligns your dynamic pricing with your overall pricing strategy.

Choose a pricing model such as competitive pricing or cost-plus pricing.

This determines how to set the price based on the conditions.

Capture your pricing model into a set of rules to implement.

Test the pricing rules to see how well they work.

Look for overpriced and underpriced situations.

Estimate the demand for your product or service based on forecasted location, time, or event to set your sales forecast.

 

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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.