Dynamic pricing is a strategy where businesses set flexible prices for products or services based on current market demands. Also known as surge or demand pricing, this approach involves continuously adjusting prices in response to real-time changes in supply, competitor activity, and other external factors.
Dynamic pricing offers businesses a powerful way to adapt to ever-changing market conditions. By leveraging real-time data, companies can optimize their pricing strategies to achieve several key advantages.
While dynamic pricing offers significant advantages, it's not without its hurdles. Businesses must navigate complex implementation and the potential for negative customer reactions. The reliance on vast amounts of data introduces both opportunities and significant risks that need careful management.
While often used interchangeably, dynamic and surge pricing have distinct applications and implications for businesses.
Dynamic pricing is a cornerstone of the travel and hospitality industries. Airlines and hotels constantly adjust rates based on seasonality and demand. Similarly, e-commerce and ridesharing services use it to manage inventory and balance supply.
The strategy also extends into the entertainment world for event and sports ticketing. Retailers apply it to perishable goods, while theme parks vary prices for peak seasons. Even utility providers use time-based pricing to manage energy consumption and reduce strain on the grid.
Implementing a dynamic pricing strategy effectively requires a sophisticated tech stack. Businesses rely on specialized software and algorithms to process vast amounts of data in real time. These tools enable automated price adjustments based on market conditions.
Is dynamic pricing legal?
Yes, dynamic pricing is legal as long as it's based on market factors like supply and demand. It becomes illegal price discrimination if prices are differentiated based on protected characteristics like race or gender, rather than neutral market dynamics.
How is this different from personalized pricing?
Dynamic pricing adjusts prices for all customers based on market-wide factors. In contrast, personalized pricing sets unique prices for individual users based on their specific data, such as browsing history or past purchases, which raises greater ethical concerns.
Will dynamic pricing alienate my customers?
It can if it feels unfair or arbitrary. Transparency is crucial. Customers are more accepting when they understand that price changes are tied to legitimate factors like demand or seasonality, rather than perceiving them as exploitative or manipulative tactics.
Revenue forecasting is the process of estimating a company's future revenue, using historical data and market trends to guide strategic planning.
A Salesforce Administrator is a certified professional who manages and customizes the Salesforce platform to meet a company's specific business needs.
Lookalike audiences are groups of potential customers who share similar characteristics and behaviors with your existing, high-value customers.
Sales territory management is the process of grouping accounts into territories and assigning them to reps to maximize sales and market coverage.
Return on Investment (ROI) is a key performance metric that measures the profitability of an investment relative to its initial cost.
Hot leads are prospective customers who have shown significant interest and are ready to buy, making them a top priority for sales teams.
Warm outreach is contacting prospects with whom you have a pre-existing connection, like a mutual contact, making your message more personal and effective.
A persona map visually outlines a target customer, detailing their goals, behaviors, and pain points to help your team build genuine empathy.
Net 30 is a common payment term where a client has 30 calendar days from the invoice date to pay for goods or services in full.
Going dark is when a once-responsive prospect suddenly stops all communication, leaving you wondering what went wrong.
Opportunity management is the process of tracking potential sales from first contact to a closed deal, helping teams prioritize and win more.
An inside sales rep sells products or services remotely from an office, using digital tools like phone and email to connect with customers.
A Search Engine Results Page (SERP) is the page displayed by a search engine after a user enters a query, listing results ranked by relevance.
Warm outbound is a sales strategy for contacting prospects who've shown interest in your brand through prior engagement, like website visits.
Intent-based leads are potential customers whose online actions—like searches or content engagement—signal a clear interest in buying a solution.
A sales kickoff (SKO) is an annual event for a sales team to celebrate wins, align on goals, and get motivated for the upcoming year.
Cold calling is a sales tactic where reps contact potential customers by phone who haven't previously expressed interest in their product or service.
A Marketing Qualified Lead (MQL) is a prospect who has shown interest based on marketing efforts but isn't yet ready for a sales conversation.
Sales team management is the process of leading, coaching, and motivating a sales team to achieve its sales goals and drive revenue growth.
Salesforce Object Query Language (SOQL) is a query language used to search your organization's Salesforce data for specific information.
Data enrichment is the process of enhancing raw data by adding missing information from other sources, making it more complete and actionable.
Lead response time is the duration between a potential customer showing interest and your team's first point of contact with them.
Learn about B2B contact base, including building an effective B2B contact base, & strategies for expanding your contact base.
CRM integration connects your CRM software with other tools, creating a unified system for all your customer data and business processes.
Event marketing is a strategy where brands engage directly with target audiences through live events like trade shows, conferences, or webinars.
An HTTP request is a message sent by a client, like a web browser, to a server to ask for a resource, such as a web page or an image.
Marketing intelligence is gathering and analyzing data about your market, customers, and competitors to inform strategic marketing decisions.
A version control system (VCS) tracks changes to files over time, allowing you to recall specific versions and collaborate without conflicts.
Inventory management is the process of ordering, storing, and using a company's inventory, from raw materials to finished goods.
An early adopter is a user who embraces a new product or technology before the majority, helping to validate and popularize the innovation.
Direct mail is a marketing method where businesses send physical promotional materials directly to potential customers' mailboxes.
A sales script is a pre-written guide of talking points that helps salespeople navigate conversations with potential customers.
User testing involves observing real users interact with a product to identify usability issues and improve the overall user experience.
Price optimization is the process of finding the ideal price for a product or service to maximize profitability or other business objectives.
Cross-Site Scripting (XSS) is a web security vulnerability that allows attackers to inject malicious scripts into trusted websites.
Payment processors are companies that handle card transactions, connecting merchants with the banks needed to complete a sale.
Learn about bottom of the funnel, including maximizing conversions at the funnel's end, & strategies for nurturing bottom-funnel leads.
A Customer Relationship Management (CRM) system is a tool that centralizes customer data to help manage interactions and nurture relationships.
Cost Per Impression (CPI) is the price an advertiser pays for each time their ad is displayed to a user, irrespective of clicks.
Direct-to-Consumer (DTC) is a business model where companies sell products directly to customers, bypassing traditional retail middlemen.
Sales Performance Management (SPM) is a suite of tools and processes that help businesses monitor, analyze, and boost sales team performance.
“No Spam” is a commitment to sending only relevant, solicited messages. It means avoiding bulk, unwanted emails to respect the recipient's inbox.
Affiliate marketing is a performance-based model where affiliates earn a commission for promoting another company’s products or services.
A Single Page Application (SPA) is a web app that interacts with the user by dynamically rewriting the current page rather than loading new pages.
Cross-selling is a sales tactic of encouraging customers to purchase products or services that are related to what they're already buying.
Social selling is the art of using social media to find, connect with, build relationships with, and nurture sales prospects.
The buyer's journey maps the path a potential customer takes, from first becoming aware of a problem to making a final purchase decision.
Search Engine Marketing (SEM) is a digital marketing strategy that uses paid tactics to increase a website's visibility in search engine results.
ABM orchestration aligns marketing and sales actions across channels to deliver seamless, personalized experiences to high-value accounts.
Serverless computing is a cloud model where the provider manages servers, so developers can focus on code without worrying about infrastructure.
A spiff is a short-term sales incentive, often a cash bonus, paid directly to a salesperson for selling a specific product or service.
Buyer’s remorse is the sense of regret or anxiety that can arise after making a purchase, often questioning if it was the right decision.
Learn about behavioral analytics, including implementing behavioral analytics successfully, & key metrics in behavioral analytics.
Nurture is the process of building relationships with potential customers, guiding them through the sales funnel with personalized communication.
Video selling uses personalized video messages to engage prospects, build rapport, and guide them through the sales funnel to close more deals.
Learn about brag book, including crafting your outstanding brag book, essential components of a brag book, & brag book vs. resume: unveiling the differences.
A System of Record (SoR) is the authoritative data source for a specific type of data. It acts as the single source of truth for an organization.
Dark social is the sharing of content through private channels like messaging apps or email. This traffic is hard to track as it lacks referral data.
Mobile app analytics involves collecting and analyzing data from mobile apps to understand user behavior and optimize the app's performance.
A User Interface (UI) is the point where humans and computers interact. It encompasses all visual elements like screens, icons, and buttons.
Learn about below the line, including key strategies for below the line marketing, & distinguishing above and below the line tactics.
Low-hanging fruit are the most obvious and easy-to-tackle tasks or goals that provide a quick, valuable return for minimal effort.
Functional testing verifies that software performs its intended functions as specified in the requirements, ensuring it works as users expect.
Compliance testing ensures a product or system adheres to specific regulations, standards, or policies set by governing bodies or organizations.
Account-Based Selling is a B2B strategy where sales and marketing treat high-value accounts as markets of one, using personalized outreach.
The decision stage is where a well-researched buyer chooses a vendor. They compare specific products and pricing before making their final purchase.
Data appending is the process of adding new data fields to your existing database records to enrich and complete your information.
Git is a distributed version control system that tracks changes in code, allowing developers to collaborate and manage project history effectively.
A headless CMS is a back-end content repository that delivers content via API to any front-end, decoupling the content from its presentation layer.
A freemium model offers a product's basic features for free, enticing users to upgrade to a paid version for more advanced capabilities.
An Applicant Tracking System (ATS) is a software application that manages your entire hiring and recruitment process from a single dashboard.
An Operational CRM is a system that automates and improves customer-facing business processes like sales, marketing, and customer service.
Generic keywords are broad search terms that lack specific details like brand or location. They attract a wide audience with less specific intent.
Revenue Operations (RevOps) is a business function that aligns a company's sales, marketing, and customer service teams to drive predictable revenue.
CRM data is the information businesses use to manage customer relationships. It covers contact details, purchase history, and communication logs.
Predictive analytics uses historical data, statistical algorithms, and machine learning to identify the likelihood of future outcomes.
Customer loyalty is a customer’s devotion to a brand, shown by their repeat purchases and engagement, driven by positive experiences and trust.
Segmentation analysis is the process of dividing a broad market into smaller, distinct groups of consumers with similar needs or characteristics.
Overcoming objections is the process of addressing and resolving a prospect's concerns or hesitations to move a sale forward.
Your email deliverability rate is the percentage of sent emails that successfully land in a recipient's inbox, rather than bouncing or going to spam.
Total Addressable Market (TAM) represents the maximum revenue a company can earn by selling its product or service in a specific market.
Sales metrics are quantifiable data points that track and measure a sales team's performance against specific goals and objectives.
Lead scoring models rank prospects by assigning points for their behaviors and demographics, helping sales teams prioritize their outreach.
Contract management is the process of creating, executing, and analyzing contracts to maximize performance and minimize financial risk.
Contact discovery is the process of finding accurate contact details for potential leads, including names, emails, phone numbers, and job titles.
Sales automation uses software to streamline and automate repetitive, manual sales tasks, freeing up reps to focus on selling.
Robotic Process Automation (RPA) uses software bots to mimic human actions and automate repetitive, rules-based tasks on digital systems.
Product-Led Growth (PLG) is a business strategy where the product itself drives user acquisition, conversion, and expansion.
AI in sales uses smart technology to automate repetitive tasks, analyze customer data, and help sales reps close deals more efficiently.
Day Sales Outstanding (DSO) is a financial ratio that shows the average number of days it takes for a company to receive payment for a sale.
Sales partnerships are strategic alliances where two companies co-sell products to expand their reach, generate new leads, and increase revenue.
A Service Level Agreement (SLA) is a contract defining the level of service between a provider and a client, including metrics and penalties.
A draw on commission is an advance payment a salesperson receives against future earnings, which is later repaid from earned commissions.
Warm calling is contacting prospects with a prior connection, like a referral or social media interaction, to make your outreach more relevant.
A Customer Data Platform (CDP) centralizes customer data from all sources to create a complete, unified profile for each individual customer.
Lead enrichment software adds crucial data to your leads, like contact info and firmographics, to help you better understand and engage them.
A sales cycle is the series of steps a company takes to close a new customer. It starts with prospecting and ends with a signed deal.
An Account Development Representative (ADR) identifies and qualifies new business opportunities, creating a pipeline for account executives.
A sales stack is the suite of tech tools—from CRMs to prospecting software—that sales reps use to close deals faster and more efficiently.
User-generated content (UGC) refers to any form of content, like images, videos, or text, created and shared by users on online platforms.