Customers are very sensitive to price changes. People’s spending habits are limited by their budgets. And any price change can affect and change them. Because of this, the demand for some products will change due to the price changes (up or down). This is known as the price elasticity of demand. For example, if the price of gas goes up, the demand won’t be much affected, since it’s one of the products that is needed for everyday life. But if the price increases for something random, let’s say chocolate, the demand will go down. People don’t need it. They’ll just substitute it with a cheaper brand or other sweets.
Basically, the price effects the demand and supply characteristics and the demand determines a company’s position on the market. If a company can’t offer a competitive price, it will be a big problem for them. It leads to fewer sales, less profit, all in all, it leads to poor business performance. This is where pricing optimization comes in the game. It is one of the most important tasks, but also one of the toughest.
First of all, optimization is a decision-making process which uses data, software, and algorithms to make recommendations. And pricing optimization is using all of that in order to make better pricing decisions.
Why use and automate pricing optimization?
Pricing optimization brings many benefits to the company, especially when the process is automated. Let’s see what are the crucial benefits that will make your business sail smoothly:
How to automate pricing optimization?
Since this is a very hard task, companies turn to software solutions such as Price2Spy. The tool offers fully automated pricing optimization, to be more precise, price monitoring and repricing services. Repricing allows companies to define their own pricing strategies (can be segmented either per product category, brand or supplier) identifying which products can go up / down in price, and get these prices changed in their online store in a direct or an indirect way.
Of course, when setting up pricing optimization rules there are many factors that you need to think about. Some of the most important ones are; your own product price, competitors’ product price, products stock availability, products’ purchase price, desired profit margin, targeted price (MAP), etc. Each of these has a certain impact on your price, which affects the demand for a product.
Depending on your situation, Price2Spy offers different, default pricing optimization options.
Since Price2Spy is very aware that default repricing opportunities aren’t going to meet everybody’s needs, we’re also offering custom repricing opportunities. You’ll set your own repricing logic and we’ll implement them for you. It’s easy like that.
Keeping up with the market is hard. If you have many products, it’s near impossible to keep track of all of them and change their prices manually. On top of that, you can’t only think about your goals, because you also need to think about your customers, since they’re the ones that keep you in the business. That’s why pricing optimization is a great help when it comes to finding the middle ground between companies’ goals and customers’.
Let us know your experience with pricing optimization softwares.