What is dynamic pricing? (AI)

Dynamic pricing, also known as surge pricing or demand-based pricing, is a strategy where businesses adjust the prices of their products or services in response to changing market conditions, such as fluctuations in demand, supply, or other external factors. This pricing model allows companies to optimize revenue by setting prices dynamically rather than keeping them static.

Dynamic pricing algorithms often take into account various factors, including:

➤ Demand: Prices may increase during periods of high demand, such as holidays, weekends, or special events, and decrease during off-peak times to attract more customers.
➤  Supply: Prices may be adjusted based on the availability of goods or services. For example, prices may increase as inventory levels decrease to encourage customers to purchase quickly.
➤ Competitor pricing: Prices may be influenced by the prices set by competitors. Businesses may adjust their prices to remain competitive in the market.
➤ Customer behavior: Dynamic pricing systems may analyze customer behavior, such as browsing history, purchase patterns, and willingness to pay, to personalize prices and maximize revenue.

Dynamic pricing is commonly used in industries such as hospitality (hotels and airlines), e-commerce, ride-sharing services, and entertainment (concerts and sports events), among others. While it can help businesses increase profitability, it can also lead to concerns about fairness and transparency among consumers.

When it comes to the hospitality sector, dynamic pricing revolutionizes traditional, static price setting per year or per season. Our technology constantly scraps market data and combines them with internal and other external data in order to optimize RevPar and total revenue.