In today’s highly competitive and data-driven market is seen differently by everybody. There are businesses that consider that the key to a successful business is just price, as digitalization took place and customers lost the liberty to compare multiple factors like quality, options, etc. On the other hand, there are still some businesses that consider all the factors of business and marketplaces as essential as price.
But still there are many businesses that get confused about both the method of market analysis and don’t quite understand what the main difference between the two is, and would the impact will be different with each method they implement.
While both methods work as a charm for the business, which is suitable for it. So let’s understand the main difference between the methods, dynamic pricing and dynamic repricing.
In this article, we will discuss about the main difference between dynamic pricing and dynamic repricing and what are the factors which differentiate them, but before that, let’s structure the article.
What is Dynamic Pricing?
When we talk about the market today also, the images of crowded places, vibrant colors and multiple shops come in our mind rather than a digital screen where there are countless options few taps away. No matter how big a revolution took place in the market there are a few factors that always have the ability to change the route of profit and sales. Factors like competitors pricing, market condition, demand of the product, the seasonal phase and many other internal and external factor.
So the pricing strategy which is continuously adjusted on the basis of internal and external factors of the market like the inventory status, demand of the product, market condition, trending product, etc, then that type of strategy is dynamic pricing strategy.
Dynamic pricing is also known as real-time pricing, as the price of the product is altered in real-time, even when a factor is also changed.
One of a great example of dynamic pricing is hotel prices, where during the vacations or local festival the prices of the hotel room skyrocketed but during the low pace or less demand the price of the room as kept reasonable and low so that they can tempt the customers. Airline is another big example of dynamic pricing as the prior you book the ticket the better for you pocket.
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What is Dynamic Repricing?
But when we talk about the dynamic repricing then it is very different story. Dynamic repricing mainly focuses on what competitors of business are setting price of a similar or same product and accordingly the prices changes to stay competitive in the market and retain customers.
In other words we can say that the only factor because of which the prices of products can be changed in dynamic repricing is when the trusted competitors change their prices, and accordingly business changes the price of their products too.
Dynamic repricing is mainly used in the e-commerce platforms like Amazon, eBay, etc, where mostly the purchase deciding factor is price and business are constantly competitive to win the buy box and offer the lowest/ best offer.
If we understand dynamic pricing with an example, then lets just say that your business is implementing the dynamic repricing and today one of your competitors dropped the price of their product by 5 bucks than a repricing tool can automatically or semi-automatically adjust the prices to remain competitive in the market. This depends on the rules you set for your competitors.
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Key Difference Between Dynamic Pricing and Dynamic Repricing
Now that you know what is dynamic pricing and dynamic repricing, you must be thinking at its is one of the same thing, both changes the prices, the main perspective of both the tools are to growth the business. But that’s not true there are many difference in both the tools and now, we are going to compare both the tools on various parameters to understand the important and main difference between them.
Main Purpose
Dynamic Pricing: The main purpose of dynamic pricing is to help the business understand the situation of the market, patterns of trends shift, and customer behavior on the basis of time and season. A dynamic pricing tool is used as guidance while creating the pricing strategy of the business.
Dynamic Repricing: On the other hand, the sole and only purpose of the dynamic repricing tool is to stay competitive in the marketplace on the basis of competitors. If your competitors are offering discounts during the low season, then your business is obliged to do the same to retain the customers.
Data Refreshing Time
Dynamic Pricing: As we know, dynamic pricing monitors lots of factors, so the data refreshment is on real-time as even a single factor alters then the whole analysis takes a new turn as the dynamic pricing tool is knee bend to help business in making accurate predication about the future situation in the market. So, in simple words, due to the involvement of many factors, the data is refreshed in real-time.
Dynamic Repricing: Dynamic repricing mainly depends on the actions of the competitors and leading companies of the industries, as the businesses take the lead of that business, so whenever a competitor changes the prices, then dynamic repricing tools come into action. So dynamic repricing tool updates the data when any competitors alter the prices of their products.
Suitable for Industry
Dynamic Pricing: When we talk about which industry is suitable for dynamic pricing, no industry does not use dynamic pricing in one way or another, as everybody needs the analysis of the market for better strategy planning. Still, there are certain industries like airline, hotel, and SaaS industries whose pricing is mainly based on the dynamic pricing analysis and predictions, and these industries have used dynamic pricing for centuries now.
Dynamic Repricing: While dynamic repricing seems like an impressive tool, its implementation in businesses is limited. The businesses that are dealing in e-commerce or have an online shop can have wonders in their hand through this tool, while there are not much of use cases in strictly online businesses, like grocery, retail shop, etc.
Dependency of Factors
Dynamic Pricing: The Dynamic pricing tool depends on many factors today, factors like present trend, competitors’ actions, demand, inventory, workforce, inflation, market pattern, etc.
Dynamic Repricing: While the dynamic repricing tool depends solely on the price, that too is the price of competitors. There is no other factor that influences the tool.
Conclusion
Dynamic pricing and dynamic repricing, both the tools are both magical wands in this fast and data-driven digital market. But both serve different goals for different businesses, so it is very important to know the key difference between them and understand which tool will work best for you.
There are many factors, and an in-depth analysis needs to be taken to understand what actually your business needs and then aid your business achieve the growth you only expected in your dream.
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