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Everything About Real-time Pricing in eCommerce and Aggregator Businesses


Every Strategy & Secret You Need to Know About Real-time Pricing in eCommerce and Aggregator Businesses

How do people generally decide to buy an item online? Whether it is booking a cab, a bus ticket, or buying a smartphone. They first look at reviews on different sites, compare prices, quality, a whole lot of research is included.

20% of the E-Commerce traffic for all sorts of product categories come from price comparison engines.

Retail giants change their prices every 3 minutes on average. (Source:

Keeping in mind to cover all your expenses and also to grow in revenue, would you consider anchoring fixed costs as per your strategy, your competitors’ price, demand or all of the above? Seems like a difficult choice to choose from?

With millions of sellers and billions of products to compete, it is easy to get buried under the huge data and feel behind among your other competitors especially when it comes to pricing across product categories.

The answer to the above is that in reality, you would need a more sophisticated real-time pricing strategy, engine or a tool that fits you in the right place in the ever-growing competitive market and equip you with the flexibility to adjust your prices as per the market demand.

What is Real-time Pricing?

Real-time pricing is the practice of changing prices dynamically for a product or a service based on several factors like sales, market conditions, stock availability of a high-demand product, past purchase data and even the weather conditions.

Real-time pricing also referred to as Dynamic pricing, Surge pricing, Time-based pricing is a strategy followed by businesses to set flexible prices for their products or services based on current market trends and demands.

“Gartner Predicts top 10 global retailers will use real-time pricing strategy by 2025”

Why Adopt Real-time Pricing?

So we have all the data on this earth. In a real-time world that is prevailing, the list price has certainly no relevance.

Be it a B2B or a B2C, your competitors are all roaring to provide what exactly customers want – everyone wants an amazon-like customer experience and no one waits for you. That’s why real-time pricing comes into the picture to deliver the right pricing strategy to your customers.

Demand fluctuations are quick and unpredictable. You need a match that tolerates demand and supply, trend, your competitors and your budget. Real-time pricing will be your perfect match.

 “20% of the companies derived more than half of the sales from eCommerce in 2018, which will be 62% in 2023” – Hanover research

Adopting dynamic pricing in your business enables you to capture the most from your revenue, optimize based on real-time inputs as opposed to setting a stable price for a long term or pricing your products too low and losing out the revenue.

The presence of a good real-time pricing intelligence software gives you room to monitor dynamically changing competition prices, level of demand, supply and stocks availability, conversion rates (as in how many people bought the product, are looking for your product) and a whole level of other price influencing factors that you never thought to consider.

How Real-time Pricing Boosts your eCommerce Growth?

A GBTA Survey in 2019 on 200 travel managers revealed that 22 per cent of them had started using dynamic pricing method and were already leveraging it with at least one hotel company. This manifests a positive reception of the new approach by the industry.

Consider a real-time hotel pricing scenario A & B, in which the hotel has 170 rooms in total.

real-time pricing for ecommerce and aggregator businesses

real-time pricing for ecommerce and aggregator businesses

 In scenario A, the hotel has a two-tier pricing system. $70 was the fixed price till 100 rooms were sold and a transient price of $100 for the next 70 rooms. The total revenue for the period (say in 1 day), 170 rooms were booked leading to total revenue of $14000.

Now consider scenario B, where the hotel has a real-time pricing system based on the demand, competitors and the response of the customers (in bookings, in bouncing, in reviews, in real-time events that happen in that particular city, etc.) The price of the first 60 rooms was booked for $70, after which it changed to $100 for the next 40 rooms, $120 for 40 more rooms and $130 for the last 30 rooms.

The revenue in case of scenario B for the same amount of rooms and during the same period rose to $16900 as against only $14000 in scenario A.

Now, consider two eCommerce websites that sell products of a particular niche.

real-time pricing in ecommerce and aggregator businesses

Competitor B peaks in revenue when compared to A, since B uses real-time pricing every time to calculate the best pricing for customers by taking into account customer LTV, competitor pricing, the demand of the product, lead scoring, frequency of the visits, cart abandonment rates and more. B changes its pricing frequently to get the maximum benefit of selling more items and making more revenue than its competitor.

Such is the power of real-time product pricing. This can combine geographical data, demographics and the above mentioned real-time pricing metrics to predict personalized prices for customers to increase revenue and sales.

See also: Top 12 predictive analytics use-cases that can revolutionize the eCommerce industry

According to David Flueck, Senior Vice President, Global Loyalty, the ML-based system for dynamic pricing has helped Hilton to increase demand forecasting accuracy by 20 per cent since 2015.

The Real-time Pricing Workflow

At any point, the process of dynamically changing prices involves many processes and touchpoints in terms of a high-level data collection, aggregation, structuring, analyzing and predicting.

This is just an example workflow that may be followed to price a single item dynamically.

Real-time pricing in eCommerce and aggregator businesses

Real-time pricing in ecommerce and aggregator businesses - an infographic

Choosing the Right Pricing Strategy

Choosing the price for your product is massively important to set the sales and revenue right. Whether you climb up the ladder of fame, revenue and brand name or you slope your way down to the snake’s body and witness your competitors’ growth from the snake’s tail, depends on how you set your price and what strategies you pursue.

When we say strategies, there cannot be a fixed strategy that you need to follow. Rapid experimenting, failing, reinventing is an iteration process that any business should follow when setting up a price strategy. What may work at a period, may not work later. Try experimenting with what works best at what situation and trend and implement them into your business for an effective pricing strategy that lifts you through the revenue game.

Here are some pricing strategies that businesses can employ to determine the prices of their products/services.

1.      Cost-based pricing

Cost-based pricing is coming up with the product cost that includes the cost of the product, marketing costs per product to make sales and the profit margin that you need to make on top of the costs. This is the simplest pricing strategy for any budding business without the need to worry about or make much research on the market and the price.

Let’s say you are dropshipping women’s fashion accessories. You source chokers from a supplier at $2 each and it takes $1 for shipping, $2 for marketing your product through FB ads and on top of this you would like to earn at least $2 as a profit per piece. So the total comes up to $7.

Go for this strategy if your primary aim is to make a profit per every product you sell without thinking about what your customers want from you and how much they are willing to pay.

2.      Competition-based pricing

Competitive pricing is more like plagiarism. When you want to do the same thing your competitor does, irrespective of whether the sales are hit on the other side or not is competitive pricing. You fail to do your homework and want to copy prices in some cases. But you may be losing out a lot more revenue without proper analysis of the true value of your product.

This strategy was widely followed because customers often compare different product prices first and then decide on the quality of the product to buy. This may work out for you if you don’t have the time for much research and sometimes you may need to slash your profit margins.

3.      Value-based pricing

Value-based pricing is a blend of the elements of the above two strategies. This is more on deciding what “value” your product offers. This may be based on your quality of the product, your brand name and loyalty, your mission, anything. This pricing is an analysis of your baseline price and your competitor price.

Suppose you sell hand-made soaps on a website and it costs you around $10 that includes raw materials, making charges, marketing and shipping costs. Your competitor sells each soap at $25, then you can price your product between $10-$25 based on the profit margin you want to make and the value you provide.

4.      Penetration pricing

Penetration pricing is a marketing strategy where a business sets a lower price to enter the competitive market and raise it later. The main mission here is to attract the customers away from the competitors. If you want to establish your presence by entering into the market by offering lower prices to your customers, disregarding the profit or loss that may incur later, then you may need to go with this one. By this, brand awareness and loyalty are raised and stood out in the long run, which may reflect the true market positioning.

5.      Psychological pricing

A pricing technique that plays an emotional perception game on the customers’ minds. Even a small detail that makes a huge difference in the impact that creates when it is priced to play with emotions.

Take the same old example of a choker neckpiece sold at $15.99 and $16. People go for $15.99 as in the mind of the “buyer” $15.99 is cheaper than $16. They tend to pay more attention to the first number on the price tag rather than the last. This creates an illusion of a cheaper product compared to the whole rounded number.

6.      Premium pricing

Premium pricing strategy is a method of setting prices higher than that of competitors or products that have similar features. This is especially a working strategy if your business sells unique products or services or have the standing out features compared with your competitors.

But when this strategy is held up, then you must make sure you provide a premium service and the highest quality and value to the customers and reiterate why the product or the service is worth its price.

7.      Anchor Pricing

Anchor pricing is another psychological pricing structure where you show both the original price and the discounted price. In most cases, the original price is slashed to make the mind of the “buyer” that he/she is saving a lot from this purchase.

Many brands across industries use anchor pricing to capture the attention of the buyers and thereby enhancing your sales percentage for the discounted price, but when you are offering it for the original price that you chose with the profit margin.

8.      Bundle pricing

This is a method of selling multiple products in a single stretch by convincing the buyers to get it at a slightly lower rate. This convinces the buyers that they get a bargained rate when compared to purchasing each mentioned item individually.

Bundle pricing is also used when there are unsold products in your inventory for a long period and hence offering a lesser price when bought in a bundle. But also make sure you also earn your profits when selling lowered price products by selling them together.

9.      Price-skimming

Price skimming is a contrary pricing strategy to penetration pricing where the business leverages competitive advantage to maximize the sales on new products and services, where initially it sets higher prices and then gradually lowers it to fit into price-sensitive customer categories.

The objective of the price-skimming strategy is to indulge in maximum profits and reap benefits from the early stage onwards.

10. Consumer-based pricing

Pricing your products with a customer-centric approach, keeping in mind who your customers are, what value do they expect from your product and the willingness to pay is the customer-based pricing strategy. Setting up your prices based on how much you will pay if you are a customer is the approach followed.

Segment your audience, define who is likely to buy your product, and target each of them with a more customer’s point of view in mind to achieve more sales and revenue.

The above 10 pricing strategies have one or the other cons that make it useless at some point of time in your business. Only when you know these pricing strategies, you may welcome Real-time pricing into your business and experience yourself on what good it can do to your business.

Knowing these 10 strategies might be helpful to set the minimum or the maximum price that you may want to offer to your customers if you incorporate real-time pricing into your business.

Ensuring you have the right dynamic pricing software that will always make you stay competitive and optimized throughout the day, week, month, seasons and year is the best strategy that you can follow.

5 Pricing Mistakes You Should Be Sure to Avoid

# 1  You imagine the lower the price, the better the result

Your common sense dictates you to lower the prices of your products to connect well with your targeted audience. But the fact is, lowering your prices might not work well in all cases, but may deteriorate the quality perception that your consumers may have it in you. You may be influenced by the thought to win the sales bid by even sacrificing your profits. Be sure to concentrate on what value it can provide to your customers and set prices based on its acclaimed quality rather than the lowest in the market.

# 2  You don’t examine your competitor’s price, but impulsively follow them

You might think setting up the prices “somewhere” between the highest and the lowest bar of the particular product of the industry standards is the safer and best option for you. But sorry that’s not how it should be.

You never know about how your competitors’ bought it, for what price, their customer acquisition cost, their business goals, you certainly do not know their internal strategies and price metrics. So it makes no sense to follow what everyone else is doing. Consider the below example of a Nike shoe (same model).

Real-time pricing in ecommerce and aggregator businesses

Different prices at different sites. You obviously have to choose something between the range. But before that, you need to dive into some research on what features, colour and profits they might get and what made them choose the particular price. Though may not be the exact calculation, you certainly will arrive at an idea of “something” to price your product as per your goals and profit margins.

# 3  You set same prices for similar alternate products

Our generation is more likely accustomed to a practice of looking at choices and varieties irrespective of what we buy. We want more options to compare and to choose the best from. Also, you may think it’s not right to set different prices for similar alternate products. But that is emotionally confusing for your consumer to choose one from them. Be sure to set slightly different prices for similar products and provide varieties in the same niche.

# 4  You fix the same price in all the marketing segments

Do not fail to understand where you stand on different marketing segments and what customers perceive about your product at different segments and levels. It is important to know where to set higher prices and which are the segments to lower your products’ prices. Because your products may solve different problems to a different set of customers. Do not fall into the trap and lose your money by setting a uniform pricing strategy.

# 5  You spend inadequate resources to manage your pricing

Spend resources and time on managing your price. Treat price as significant as your cost handling and sales volume. Good price setting practices are to be religiously followed like an art. It is enormously important to invest in a good real-time pricing tool if you are sure you are going to scale up your business and stand ahead of your competitors. Spending all your time and resources on increasing sales volume and cost control practices, and overlooking how you set your prices may not take you a long way. This is important for your growth and profit opportunities.

Amazon changes its prices more than 2.5 million times a day, according to Quartz’s article. Using price optimization tactics and tones of data that Amazon collects on users, they easily managed to increase their annual profits by 25%, according to Investopedia.


The importance of an effective pricing strategy for your eCommerce or any business is hard to deny. Real-time pricing equipped with ML allows businesses to implement a profitable pricing strategy by taking into account hundreds or thousands of pricing factors including price elasticity, customer segmental price according to their willingness to pay. Real-time pricing or Dynamic pricing has the power to be a facilitator of strategic growth, advancement, revenue management and a positive change.

Don’t just gather data and employ it for analysis, but rather use the data with the right tool, the right strategy that you think works best for your business.

If you think you need to take your pricing strategy to the next level by using AI, ML and drive your business with greater profits than you ever imagined, then take advantage of this opportunity.

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