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E-commerce and dynamic pricing

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E-commerce and dynamic pricing

The strong competition imposed by the market in any area, both in the provision of services and in the sale of products, requires entrepreneurs to keep their prices within a certain pattern in order not to lose customers.

At the same time, it is advisable not to lower the values too much, as this could compromise the profit margin. Finding the balance between these factors is the manager’s challenge to define the selling price of consumer goods.

How should entrepreneurs act to maintain adequate prices?

What is the selling price?

The selling price is simply to determine the cost your product or service will have in the marketplace for the consumer. But what’s the right way to calculate it? One of the formulas is the sum of the production costs and their percentages, plus the expenses, both fixed and variable, plus the percentage of profit expected from the sale.

E-commerce and dynamic pricing

The different buying possibilities through e-commerce make the market even more competitive and demand from the merchant using this platform an own method to set the prices. In addition, the ease of buying over the Internet allows the potential customer to compare prices on many websites in a short time. To meet this demand there is dynamic pricing.

Dynamic pricing is done through automated systems, with tools programmed to define the best price to sell your product. Consider a scenario where your e-commerce sells 50 different products, and other stores sell the same products.
If 40 of them have the highest values, the consumer will opt for competition. This can also happen if the other 10 products have very low prices, as this generates distrust on the part of the consumer.

What makes the dynamic pricing system is to accompany the movement of prices, both yours and your competitors, and adapt them to those practiced by the market, through systems and algorithms, so that they are competitive and at the same time do not bring harm. This measure tends to increase the conversion rate and generates better sales results.

Now that you know everything about the selling price, put into practice the tips and find the ideal price for your products. If you have any questions, suggestions or advice on the subject, comment below. Take also to share this content with your friends, colleagues and collaborators, through social networks.

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Jose Limardo

Jose Limardo

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