- Pricing strategies are an invaluable tool
for e-commerce sellers
and an essential part to maximizing your store's revenue.
And an effective pricing strategy
not only helps you increase your sales,
but also with the average order value per customer.
However, the advancement of technology
has enabled new effective method dynamic pricing.
So, let's talk about the nuances of this model
and how you can use WooCommerce with dynamic pricing.
- Like any pricing strategy,
dynamic pricing seeks to maximize conversions
and revenue per sale.
The distinguishing feature of the strategy
is that it is fully, or at least partially automated.
For example, if your competitor prices their products
at $5 each, but you sell yours at $2,
you'll likely earn the sale,
but you're leaving potential money on the table.
With a dynamic pricing strategy,
you can track your competitor's prices
to automatically adjust your prices.
You can still beat them on price,
but are able to improve your margin on the sale
by being on top of your market.
- So there are two different types
of dynamic pricing strategies that you should know about,
starting with time-based dynamic pricing.
Now, with this strategy,
you increase or decrease the prices based on time,
and this is the simplest form of dynamic pricing
and it has been used by traditional retailers
well before the rise of e-commerce tech.
And the perfect example is a car salesman
that needs to reach their quota at the end of the month.
So to hit their sales target, they will decrease prices
to further entice potential buyers.
Now, competitor based dynamic pricing is another one.
And with this type of dynamic pricing,
you adjust your prices based on the competition.
So if one raises their prices, guess what?
You raise yours.
And if they lower their prices, you do the same.
Depending on the direction of the change,
this tactic can help you remain competitive
or optimize your margins.
- Dynamic pricing is used by companies in all industries,
but the best example is the travel industry,
particularly airlines.
If you've ever searched for plane tickets,
you may have noticed the price changes with different visits
on the same day.
While not a typical commerce-based business,
these companies are able to fluctuate their prices on demand
to best maximize their revenue.
Dynamic pricing is also frequently used
by Rideshare apps like Uber
and conditions such as rain, snow,
or a concert downtown create demand
that can lead these services
to increase their prices in real time.
For e-commerce companies like Amazon,
like in many other things,
is the leader when it comes to dynamic pricing
The company is known to reprice millions of products daily
and this can happen as frequently as every few minutes.
- Now let's talk about the potential disadvantages
of dynamic pricing.
And while there are many advantages
to implementing a dynamic strategy
as the business offering the product or service,
your customers won't appreciate being price gauged.
If a shopper is repeatedly viewing your items
and then notices the price change,
specifically if it goes up,
they might get frustrated, don't blame 'em,
and choose to not buy from you.
So use this technique at your own risk.
- So let's talk about
how you can use the WooCommerce dynamic pricing plugin
to set bulk and individual prices
on an item and category basis.
With this plugin,
you can choose to make the pricing effective for everyone
or you can select specific roles
for it to only apply to certain users.
You can also set parameters
for different types of quantities,
like the product quantity,
so the total number of items added to the order,
variation quantity,
the total number of variations added to the order,
cart line item quantity,
quantities are based on the individual line items
in the cart, useful if you sell bundles,
and then there's quantity of category.
With this, you can select categories to use
to build the price adjustment.
For more complex pricing rules,
there's an option for advanced category pricing.
With this, you can set category based pricing
to only apply for certain order quantities,
dates, user roles, or other criteria that you set.
For example, you can set a 20% discount
for anyone that buys more than two products
in a particular category,
or you can enable a buy one, get one free offer
for specific categories.
Honestly, there is so much you can do with this plugin
and we've only scratched the surface.
So check out the link in the description to learn more.
- And dynamic pricing isn't exclusive to travel companies
or the likes of Amazon,
and it doesn't require expensive and complex technology.
With WooCommerce and a little knowhow,
new and smaller businesses can reap the valuable rewards
that come from a well-executed pricing strategy.
All right, that's a wrap,
but your journey doesn't have to end here.
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As always, thanks for watching.
This is The Journey.