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AI-Powered Dynamic Pricing: The Secret Behind Profit-Making Companies

It is quite common to notice price changes for the same product or service during different times of the day.

For instance, if you are a regular Uber user, you must have noticed that at times, say during rush hour or when there is bad weather, prices shoot up.

Dynamic Pricing
Dynamic Pricing

In e-commerce, a product might cost more than it did a day ago on Amazon, yet to you, nothing has changed.

These price fluctuations are caused by demand and supply forces and the large and successful companies have a secret weapon that helps them make these changes, which is AI-powered Dynamic Pricing.

AI-Powered Dynamic Pricing:

Dynamic pricing is basically adjusting these charges according to demand and supply, and when powered using AI, you get these benefits:

  1. Real Time Price Monitoring

Price-monitoring or price intelligence is the primary factor that drives dynamic pricing. Using online retail as an example, the first step towards being competitive and beat your competition is to monitor their pricing and behavior, and this will give insights on how to respond.

The main aim of real-time price monitoring is to increase profits by raising revenue margins and apart from keeping tabs on your competitors, prevailing conditions also play a huge role in this process.

These conditions include things such as the weather. For instance, during winter, the demand for jackets and sweaters will most likely go up, thereby increasing demand. A slight price increase could earn you a lot of profit.

To help you drive this operational growth and efficiency, while also saving on time, money and effort, you can optimize the entire retail life cycle using inoptimizer, which is one example of an AI-powered dynamic pricing tool that is very effective.

  1. Price recommendation

In addition to price intelligence, price recommendation is the next big plus that you get. Basically, the AI does the thinking for you as an expert, coming up with the best strategies, so as to attain the highest profit margin.

Challenges in AI-Powered Dynamic Pricing

Even with the above benefits, there are some challenges in this business optimization approach. However, this does involve the actual operation of the technology itself, rather it has to do with things such as implementation costs, which can be a limiting factor towards its adoption by small companies.

Also, in some industries, consumers and existing laws are against dynamic pricing because they view it as a way to exploit the masses for the gain of the business.

How to Implement Dynamic Pricing

There are two ways to implement dynamic pricing. You can either build or buy. Building involves hiring professionals to develop a fully personalized and customized system but there are a couple of issues that arise from this. These are the cost and time taken in this development process.

Buying is slightly cheaper and takes a shorter time to set up but you must ensure that you get a good quality tool that is tried and tested by other different companies.


All in all, if you want to build a profitable business, AI-powered dynamic pricing is something to look keenly into because it will give you an edge over your competitors while also drastically boosting your business’ profit margin.

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