Standardised price tags have always been the primary method of pricing items throughout the history of retail. Prices change of course, but you would never sell a specific item to one person at one price, and the exact same item to someone else at a wildly different price. Back in 2000 there was an experiment about dynamic and personalised pricing strategies that Amazon put in play – this was prior to it becoming the all encompassing behemoth we know it as today. It began to charge different customers different prices for standard DVDs and other items. The response was quick and negative from customers, and we have not seen the same tactic from one retailer since.
Personalised pricing is practices across the Internet, with different pricing strategies depending on the retail, the distance and shipping concerns etc. but the focus these days is on whether dynamic pricing is the true form of pricing strategy that retailers should aim to implement.
Dynamic pricing strategies allows the retailer to change the price of a product in from one second to the next, taking advantage of competitor and marketplace data and information and trends regarding customers and potential customers. Pricing strategies continue to be complex however, and it is important that you have the ability to cut through the weeds and see the correct type of data that can help you make an effective decision.
Pricing strategies and retail audits from professional services allow companies to continue to effectively compete in an online marketplace that increases in competition on a regular basis. There is of course the fine balancing act to dynamic pricing strategies that must always be considered. What happens if you increase the price of a product too much, and it alienates many of your existing customers and scares away many potential customers who were about to press the purchase button on your ecommerce website? Alternatively, making just the right call on pricing could deliver incredible increased profits for the retailer in question, without damaging customer numbers.
Price tags have only really been with us since the late 19th century, with bartering the old fashioned way of purchasing items from traders, or trade-offs between the two parties. As technology continues to change and algorithms and robots increasingly able to take control of an automated process of pricing strategies and other retail processes, could we see a return to personalised pricing in the mainstream retail market? It is hard to tell whether this will ever be successful, especially as there is now such a diverse cast of retail options online and on the high street. If customers are unhappy with the company that attempts to introduce personalised pricing strategies, they can easily find a competitor. Being the first to jump will be a brave move, even for one of the biggest companies in the world in Amazon.
As a small to medium sized retail business employing the services of a retail audit company will help you to develop the correct pricing strategies for your business, marketplace, and customers.