The pro’s and cons of the dynamic pricing strategy

January 26, 2019


Deciding upon a pricing strategy can be complex and cost a lot of time and energy. In this blog I’ll explain what the dynamic pricing strategy is and how you can automate the proces of decision and keeping your prices up-te-date.

Dynamic pricing strategy

Dynamic pricing is a pricing strategy based on price discrimination. That sounds more aggressive than it really is. What is price discrimination?

“Price discrimination is charging different prices for comparable products to differing clients or client groups”

And what is the difference between price discrimination and the dynamic pricing strategy?

With dynamic pricing you adjust your prices based on, for example, your own production costs, the market demand, the customer profile and the prices of competitors, in order to find the most optimal price in each different moment. So instead of making your customer your baseline, you consider a lot of factors and set many parameters for the dynamic pricing strategy.

You can apply a dynamic pricing policy based on the following criteria:

  1. Based on competition;
  2. Based on demand;
  3. Based on location and behavior;
  4. Based on a customer profile.

What are the pro’s for the dynamic pricing strategy?

  1. Flexibility: you’ll be able to easily adjust to the different season (sales/Christmas, etc.) and you can adjust your prices to demand and offer;
  2. You can completely automate, so you always have the best price in the market;
  3. You can easily combine sales strategies, like coupons or discount codes.

Other advantages

Another advantage of the dynamic pricing strategy, is the ability to bind clients, for example by offering loyalty bonuses. Some organizations have their own personal discount cards for customers that often buy at there store. Another examples are telephones. Those are always very expensive when they are released, but the more time goes by, the cheaper they become. There are other ways to take advantage of the dynamic pricing strategy.


  1. Transparency –> disadvantaged customers. Some customers will pay more for the same product and might feel disadvantaged. They might be compelled to give bad reviews, which are obviously bad for your PR;
  2. By always being cheaper than your competitors, you might initiate a price war;
  3. Customer expectations may not be met. If you claim to ask the cheapest price, but the customer finds a cheaper offer somewhere else after they have bought from you. Or the other side: if a customer decided to buy from you half a year ago, but had to save up in order to have enough money and than finds out you raised the price a lot. That’s painful;
  4. It takes a lot of time and energy to keep analyzing the market and your competitors. Scraping websites, limited offers etc.

Disadvantage number 4, however, doesn’t necessarily need to be a problem. With Pricesearch, you can fully automate the dynamic pricing strategy and make running your webstore a lot easier.

Also want to make the proces easier?

With Pricesearch, you automate the entire proces of price decision.