Dynamic pricing is the name given to the automatic price correction action performed by a software integrated into the e-commerce platform in which a virtual store is structured and managed.
Virtual stores built and managed via the Vtex platform, for example, can embed dynamic pricing software such as Precifica and Sieve in their pricing API.
Basically, pricing software updates prices according to:
– Internal indicators
The e-commerce administrator enters (into the software) parameters such as the lower sales margin and the percentage by which a product should be cheaper compared to the same product sold by competitors.
– External indicators
The software scans competing sites, checks how their prices are set and applies the rules specified by the e-commerce administrator in the “internal indicators” to correct their own prices.
As you may have already noticed, this system is not advantageous for online stores with few products, but it is very useful for " long tail " type e-commerce businesses , which have many items from different brands and models.
In other words, analyzing and updating the prices of 10 or 20 products every two or three hours is a task that can be easily accomplished by one person. In a catalog with more than 2 products, as is the case of a large shoe or book store, among others, price updating is more feasible if it is carried out in an automated way, via dynamic pricing software.
By automatically correcting prices, dynamic pricing software provides:
– Better fit: you can sell more by keeping your products always within your profit margin and a few reais below your competitors.
– Greater agility: once the internal indicators have been adjusted, the pricing software does all the rest of the analysis and adjustment work on its own, eliminating manual intervention, large teams, bureaucracy, etc.
Therefore, if you intend to work with a "long tail" type of online store, be sure to invest in good dynamic pricing software and, of course, an e-commerce platform that allows such integration.
