Price Points by Omnia Retail

In Omnia's Pricing Blog, our pricing experts cover all the latest trends, Omnia pricing events, customer insights and pricing strategies.

Developing a pricing strategy: From 'Pricing by feel' to data-driven decisions

Pricing is one of the most important, and often misunderstood, topics in retail and e-commerce. The pricing 'iceberg' goes deeper than most expect. It starts with a single question: what company aims are you trying to...

Pricing is one of the most important, and often misunderstood, topics in retail and e-commerce. The pricing 'iceberg' goes deeper than most expect. It starts with a single question: what company aims are you trying to achieve within pricing? Data-driven pricing strategies impact more than just revenue generation. They also play a vital role in shaping customer perceptions, and market competitiveness. Businesses can leverage a wealth of information to fine-tune their pricing strategies. In this blogpost, we dive deeper into the importance of data and automation and how they affect shaping your pricing strategy. The challenge of pricing In the dynamic world of retail and e-commerce, pricing is both an art and a science. Many industry professionals have developed an intuitive sense for what works in pricing, relying on experience and market knowledge to make decisions. However, this intuitive approach, while valuable, often falls short of a comprehensive, developed strategy. The pitfalls of intuitive pricing Companies frequently operate with loosely defined pricing rules that have evolved over time. This approach, sometimes referred to as "pricing by feel," may seem effective in the early stages of a business. However, as companies grow and markets become more complex, several challenges emerge: 1) Overwhelming assortment growth As product catalogues expand, manually managing prices for each item becomes increasingly time-consuming and prone to errors. What once was a manageable task for a small team or even an individual becomes an overwhelming endeavour. 2) Rapid shifts in competitive pricing The digital marketplace is characterised by its volatility. Competitors can adjust their prices multiple times a day, responding to market demands, inventory levels, or promotional strategies. Keeping up with these changes manually is virtually impossible. 3) Expanding market dynamics As companies grow, they often enter new markets or face increased competition. Each market may have its own pricing norms, consumer behaviours, and competitive landscapes, further complicating the pricing process. 4) Inconsistent pricing decisions Without a structured strategy, pricing decisions can become inconsistent across products or over time, potentially damaging brand perception or profit margins. The need for a structured approach Recognizing these challenges, it becomes clear that transitioning from 'pricing by feel' to a codified, explicit pricing strategy is crucial for sustained success, especially as you expand either the number of products or number of markets. However, this transition can be daunting. It requires a shift in mindset, the adoption of new technologies, and often a restructuring of some internal processes. This article aims to demystify this process, breaking down the first steps in developing a robust pricing strategy. Our goal is to guide retailers through the transition from intuitive pricing to making objective, data-driven decisions with increased speed and accuracy. By embracing a structured approach to pricing, businesses can: Respond more quickly to market changes Maintain consistency across large product assortments Optimize prices for different market segments Automate routine pricing decisions, freeing up time for strategic thinking Make more informed decisions based on data rather than gut feeling In the following sections, we'll explore how to begin this journey, starting with understanding your current position and defining your pricing goals. We'll then delve into practical steps for implementing a data-driven pricing strategy that can grow and evolve with your business. The importance of data and automation In the modern retail landscape, pricing excellence is closely linked to the quality and accessibility of data. High quality, trusted data is the foundation upon which effective pricing strategies are built. This data includes not only your own sales and inventory information, but also competitive intelligence and market trends. Understanding customer behavior is equally important. Insights into how customers respond to different price points can guide your segmentation and personalization strategies. Additionally, keeping an eye on broader market trends helps you anticipate shifts in demand or supply that may affect your pricing. The Power of Automation While data is essential, its true potential shines through automation. Pricing automation tools can adjust prices across thousands of SKUs in real-time, something that would be nearly impossible to manage manually. This capability ensures consistency in applying your pricing strategy across your entire product range. Advanced algorithms can consider multiple factors at once, optimizing prices based on a complex set of rules and goals. By automating routine pricing tasks, your team can shift their focus to strategic decision-making and long-term planning. Building Trust in Automated Systems Transitioning to automated pricing requires trust. Start by piloting the system on a subset of products and regularly auditing its decisions. Transparency in how the system operates is key, as is providing ongoing training to help your team understand and interpret its outputs. By leveraging high-quality data and reliable automation, retailers can create flexible, integrated workflows that adapt to market changes in real-time. Starting Your Pricing Strategy Before diving into new pricing approaches, assess your current position. Analyze how effective your existing methods are, evaluate your product portfolio for price sensitivity, and review your cost structure and profit margins. Defining your strategic objectives is the next step. Consider your desired market position and how you want your brand to be perceived through pricing. Think about your growth targets and where your current pricing processes might be inefficient. Transform these objectives into actionable steps by setting specific, measurable goals and identifying key products or categories for focus. Determine the data and tools necessary to support your strategy and outline your decision-making process for price changes. Ensure your pricing strategy aligns with your overall business goals. Collaboration with other departments, like sales and marketing, is essential for alignment. Assess the resources needed for implementation and develop a timeline that includes milestones and checkpoints. Finally, create a feedback loop to continuously improve your strategy. Establish key performance indicators to measure effectiveness, set regular review periods for assessment, and encourage feedback from sales teams and customers. Talk to one of our consultants about dynamic pricing. Schedule demo here Anticipating market reactions In the fast-paced world of e-commerce, where prices can change multiple times daily, anticipating and responding to market reactions is crucial. When implementing a new automated pricing strategy, consider not just your actions, but how competitors and customers might respond. Understanding competitor behaviour 1) Analyse historical patterns: Look at how competitors have reacted to price changes in the past. 2) Identify key competitors: Not all competitors are equal. Focus on those who have the most impact on your market. 3) Monitor frequency of changes: Some competitors may adjust prices hourly, others weekly. Understanding these patterns can inform your strategy. Price monitoring software helps you with this crucial step. Mitigating Risks To avoid detrimental outcomes like price wars, it's essential to adopt a strategic approach. One effective strategy is selective price matching, where you only follow the prices of key competitors and set clear boundaries on how low you're willing to go. This approach allows you to consider matching prices on key value items (KVIs) while maintaining margins on other products. Additionally, implementing safety rules such as setting minimum profit margins, establishing maximum discount percentages, and using dynamic floor prices based on cost and desired profitability can help safeguard your business. Another important strategy is to manage your repricing frequency strategically. Balancing responsiveness with stability is crucial, and you might consider time-based rules, such as not changing prices more than once per day. Different product categories may require different repricing frequencies. Beyond price, differentiation can be achieved by enhancing your value proposition through service, warranty, or bundling. Using dynamic pricing on unique product combinations that are harder for competitors to match can also be beneficial. Lastly, maintaining a consistent price position, such as always being 5% below a key competitor, and adjusting the index based on product category or lifecycle stage can help you stay competitive without engaging in harmful price wars. Monitoring and adjusting Implement a system to continuously monitor the effects of your pricing strategy: Track key metrics like sales volume, revenue, and profit margin Set up alerts for unusual competitor behaviour or market shifts Regularly review and adjust your rules and thresholds By anticipating market reactions and implementing a flexible, rule-based strategy, you can navigate the complex e-commerce landscape more effectively, balancing competitiveness with profitability. Conclusion: Embracing the future of pricing in E-commerce As we've explored throughout this article, the landscape of pricing in retail and e-commerce is undergoing a dramatic transformation. The shift from intuitive, "feel-based" pricing to data-driven, strategic approaches is not just a trend—it's becoming a necessity for businesses looking to thrive in an increasingly competitive and dynamic marketplace. Key takeaways 1) The power of strategy: A well-developed pricing strategy is crucial for optimising sales, margins, and market position. It provides a framework for consistent decision-making and helps align pricing with broader business goals. 2) Data as the foundation: High-quality, trustworthy data is the bedrock of effective pricing. It provides insights into market trends, competitor behaviour, and customer preferences, enabling more informed and precise pricing decisions. 3) Automation as a game-changer: Pricing automation tools allow businesses to respond rapidly to market changes, maintain consistency across large product assortments, and free up valuable time for strategic thinking. 4) Anticipating market reactions: In the fast-paced world of e-commerce, it's crucial to not only set prices but also anticipate and plan for how competitors and customers might react. 5) Continuous Improvement: A successful pricing strategy is not static. It requires ongoing monitoring, analysis, and adjustment to remain effective in a changing market. The road ahead As we look to the future, several trends are likely to shape the evolution of pricing strategies: Artificial intelligence and machine learning will drive predictive pricing and real-time optimization, while more granular data enables personalized pricing tailored to customer behavior and preferences. However, businesses must address the ethical implications of dynamic and individualized pricing. Additionally, pricing strategies will increasingly integrate with broader business functions, such as supply chain and customer relationship management. The future of retail belongs to those who can price smartly, react quickly, and adapt continuously. With the right strategy and tools, your business can be at the forefront of this pricing revolution. The time to start is now. Learn more about our revolutionary and intuitive approach to Dynamic Pricing here. Read more about interesting pricing strategies here: What is Dynamic Pricing?: The ultimate guide to dynamic pricing. What are the best pricing strategies?: Read about 17 pricing strategies for you as a retailer or brand. What is Price Monitoring?: Check out everything you need to know about price comparison and price monitoring. What is Value Based Pricing?: A full overview of how price and consumer perception work together. What is Charm Pricing?: A short introduction to a fun pricing method. What is Penetration Pricing?: A guide on how to get noticed when first entering a new market. What is Bundle Pricing?: Learn more about the benefits of a bundle pricing strategy. What is Cost Plus Pricing?: In this article, we’ll cover cost-plus pricing and show you when it makes sense to use this strategy. What is Price Skimming?: Learn how price skimming can help you facilitate a higher return on early investments. What is Map Pricing?: Find out why MAP pricing is so important to many retailers.

Developing a pricing strategy: From 'Pricing by feel' to data-driven decisions

Top 7 strategies for successful digital pricing transformation

7 Strategies for Successful Digital Pricing Transformation Pricing transformation means completely changing the way a company sets its prices, using new digital tools and technologies to make better pricing decisions....

7 Strategies for Successful Digital Pricing Transformation Pricing transformation means completely changing the way a company sets its prices, using new digital tools and technologies to make better pricing decisions. This process aims to set prices that accurately reflect the perceived value of products or services, dynamically respond to market competition, and maximize profitability. Leveraging software solutions, businesses can ensure they are setting optimal prices for each transaction, considering factors such as customer demand, market trends, and competitive landscapes. In today's rapidly evolving business landscape, pricing transformation has become a critical priority for organizations seeking to stay competitive and maximize profitability. As market dynamics shift and customer expectations evolve over time, companies must adapt their pricing strategies to keep pace. Pricing platform provider Omnia Retail has joined forces with Horvath, the international management consultancy with a focus on transformation and digitization, to share insights on the key elements of success we observe in businesses that have successfully undergone a pricing transformation. Drawing on our combined expertise in pricing software and strategies, we've identified seven key pillars that can help businesses successfully navigate this crucial process: 1. Secure Full C-Level Sponsorship The foundation of any successful pricing transformation lies in obtaining full support from top management. Our experience shows that pricing transformation needs to be a top priority for sales and marketing, product management, finance, and IT departments. Without strong backing from the C-suite, pricing initiatives often struggle to gain traction, especially because they impact many teams and may fail to deliver the desired results. With C-level sponsorship, the right KPIs (profit/revenue) can be prioritized effectively within each team. To achieve C-level sponsorship, we suggest: - Articulate the potential value and impact of pricing transformation on the company's top line - Develop a compelling business case that outlines both short-term wins and long-term strategic benefits - Quantify benefits by running a proof of concept (POC) where you A/B test the effectiveness of your pricing strategies - Ensure that pricing objectives are aligned with overall business goals and strategy By making pricing transformation a C-level priority, companies can ensure that the necessary resources, attention, and support are allocated to drive meaningful change. 2. Foster Collaboration Between Business and Technology Teams Successful pricing transformations are not solely a business initiative or an IT project; they require seamless collaboration between both domains. Our experience shows that when both the business and IT sides feel ownership, a well-developed pricing strategy will take shape and can be effectively implemented. We suggest to consider the following: - Establish cross-functional teams that bring together business expertise and technical knowledge - Ensure clear communication channels between business stakeholders and IT professionals - Develop a shared understanding of pricing goals, challenges, and potential pitfalls - Leverage technology as an enabler of pricing strategies, not just as a tool for implementation Remember, introducing pricing software alone does not solve pricing problems. It's the synergy between business acumen and technological capabilities that drives true transformations. 3. Focus on Big Wins and Quick Victories While pricing transformation is often a long-term journey, it's essential to maintain momentum by focusing on major achievements and celebrating quick wins along the way. To do so, we suggest the following: - Build confidence in the transformation process - Demonstrate tangible value to stakeholders early and fast (e.g. the aforementioned POC) - Generate enthusiasm and buy-in across the organization - Secure ongoing support and resources for the initiative To achieve this: - Start with an isolated part of the business. E.g. one category or 1 geographical location. This allows for a quicker ROI and lower time investment. Successful pilots then typically serve as boosters for global roll-out. - Identify high-impact areas where pricing improvements can yield significant results such as focussing on highly dynamic product groups, Key Value Items (KVIs), and high runners. - Use available technology in steps. First automate the more tedious tasks to free up time, then use that time to focus on developing commercial strategy in more depth. - Celebrate and communicate successes internally to maintain motivation and engagement as a transformation needs to be sold internally as well in its early stages. Any improvement in pricing should pay for itself. By delivering on quick wins, you can cross-finance the journey and support fast achievements, creating a positive cycle of improvement and success. 4. Internalize Pricing Know-How External consultants and software partners can kick-off a pricing transformation. They will generate value quickly but it’s crucial to internalize pricing know-how within your organization. Both for adoption and continuity, dedicated resources are critical. This ensures long-term success. We suggest following steps to internalize pricing knowledge: - Invest in training and development for your team - Document how you develop and execute your pricing strategy - Encourage knowledge sharing and best practice dissemination across departments/teams/countries - Use a proper pricing platform that enables collaboration & knowledge sharing within your organization - Develop a pipeline of pricing talent within your organization By making a pricing transformation program truly yours, you build internal capabilities that will drive continuous improvement and adaptation to market changes. 5. Include Local Teams in the Process Pricing transformation should not be an "ivory tower" exercise conducted solely at headquarters. To ensure success, it's crucial to involve local teams and incorporate diverse perspectives from across your organization. We suggest the following to include local teams: - Engage sales representatives in target markets to gather on-the-ground insights - Seek feedback on conceptual and design ideas from front-line employees - Involve top performers from various regions in the transformation program - Conduct pilot programs in select markets to test and refine pricing strategies By going out and involving sales reps in markets, you can get valuable feedback, test ideas, and create a more robust and effective pricing transformation program. 6. Embrace Continuous Iteration and Adaptation In today's fast-paced business environment, a static pricing strategy is a recipe for obsolescence. Your competitors are constantly evolving their approaches, and your pricing strategy must do the same to remain effective and competitive. Following key reasons to prioritize continuous iteration: - Market dynamics change rapidly, affecting demand patterns and customer preferences - Competitors adjust their strategies, potentially eroding your competitive advantage - New technologies emerge, offering opportunities for more sophisticated pricing approaches - New competitors might pop-up or existing competitors might fundamentally change their commercial strategies in certain categories/geographies - Economic conditions fluctuate, impacting customer purchasing power and behaviour To implement an iterative approach to pricing: - Establish a regular review cycle for your pricing strategy, considering both short-term adjustments and long-term strategic shifts - Leverage data analytics to monitor market trends, competitor actions, and the impact of your pricing decisions in real-time - Create a feedback loop that incorporates insights from sales teams, customer service, and market research - Develop scenario planning capabilities to anticipate and prepare for potential market shifts - Foster a culture of experimentation, where testing new pricing approaches is encouraged and learnings are quickly incorporated By committing to continuous iteration and adaptation, you ensure that your pricing strategy remains agile, responsive, and ahead of the curve. This iterative mindset will help you stay one step ahead of competitors and maintain a strong market position in an ever-changing business landscape. 7. Ensure Transparency and Organization-Wide Understanding A successful pricing transformation goes beyond just implementing new strategies and technologies. It's crucial that the entire organization understands and embraces the new approach. Transparency in both the strategy and the tools used to execute it is key to preventing resistance and fostering widespread adoption. Following key reasons why transparency is critical: - Builds trust across departments and hierarchical levels - Increases buy-in and commitment from all stakeholders - Facilitates better decision-making at all levels of the organization - Prevents the "black box" syndrome where pricing decisions seem arbitrary or unexplainable Steps to promote transparency and understanding: - Clearly communicate the rationale behind the pricing strategy to all employees, not just those directly involved in pricing decisions - Provide comprehensive training on the new pricing approach and any associated software or tools - Ensure that the pricing software used is user-friendly and provides clear explanations for its recommendations - Provide access to relevant pricing dashboarding broadly in the organisation - Create accessible documentation that outlines the principles, rules, and logic behind the pricing strategy - Establish open channels for questions, feedback, and suggestions from employees at all levels - Regularly share success stories and case studies that demonstrate the positive impact of the new pricing approach If a pricing strategy is not understood, it is unlikely to be effectively implemented. By prioritizing transparency and fostering organization-wide understanding, you create an environment where everyone from sales representatives to C-suite executives can confidently explain and support the pricing decisions being made. A pricing transformation is a complex yet critical process for retailers aiming to thrive in today's dynamic market. By implementing these seven key strategies, organizations can set themselves up for long-term success. As market dynamics shift, customer expectations evolve, and competitors adjust their strategies, your pricing approach must remain flexible and responsive. By internalizing expertise, leveraging technology wisely, and fostering a culture of pricing excellence throughout your organization, you can create a pricing strategy that is both robust and adaptable. At Omnia Retail and Horvath, we're dedicated to helping businesses navigate the complexities of pricing transformation. By leveraging our combined expertise in retail pricing strategies and management consulting, we provide comprehensive solutions that drive sustainable growth and profitability. As you embark on your own pricing transformation journey, keep these seven key strategies in mind. With the right approach, commitment to transparency, and a willingness to iterate and adapt, you can unlock the full potential of your pricing capabilities. This will not only lead to improved financial performance but also position your organization to swiftly respond to market changes and maintain a significant competitive advantage in your industry. Read more about pricing strategies here: What is Dynamic Pricing?: The ultimate guide to dynamic pricing. What our the best pricing strategies?: Read about 17 pricing strategies for you as a retailer or brand. What is Price Monitoring?: Check out everything you need to know about price comparison and price monitoring. What is Value Based Pricing?: A full overview of how price and consumer perception work together. What is Charm Pricing?: A short introduction to a fun pricing method. What is Penetration Pricing?: A guide on how to get noticed when first entering a new market. What is Bundle Pricing?: Learn more about the benefits of a bundle pricing strategy. What is Cost Plus Pricing?: In this article, we’ll cover cost-plus pricing and show you when it makes sense to use this strategy. What is Price Skimming?: Learn how price skimming can help you facilitate a higher return on early investments. What is Map Pricing?: Find out why MAP pricing is so important to many retailers.

Top 7 strategies for successful digital pricing transformation

Top 17 E-Commerce Pricing Strategies for Retailers and Brands

Setting the right price for your e-commerce products is like playing a game with extremely high stakes, no clear rules, and ultra-intense competition. Choose the right price over time, and you can win over your target...

Setting the right price for your e-commerce products is like playing a game with extremely high stakes, no clear rules, and ultra-intense competition. Choose the right price over time, and you can win over your target customers, creating loyal buyers who keep your business growing for years to come. Choose the wrong price and everything could go south, quickly. So, how can e-commerce merchants choose the right pricing strategy or combination of strategies? In this comprehensive guide, Omnia covers 17 common pricing strategies in e-commerce and offers some advice for finding the right action plan for your business. What Are E-commerce Pricing Strategies? E-commerce pricing strategies are approaches used by online businesses to determine, adjust, and maintain the prices of their products or services over time. Strategies should take into account the company’s revenue goals, production costs, and other KPIs like customer lifetime value (CLV) and average order value (AOV). Understanding Pricing Terminology: Strategy, Tactic, and Rule Before diving into specific pricing approaches, it's important to understand the key differences between pricing strategies, tactics, and rules, terms that are often used interchangeably but have distinct meanings in e-commerce pricing. What is a Pricing Strategy? A pricing strategy is the overarching, long-term approach that guides how a business positions its products in the market through price. It's the high-level framework that aligns with your business objectives and brand positioning. Examples include premium pricing, competitive pricing, or value-based pricing. What is a Pricing Tactic? A pricing tactic is a specific short-term action or technique used to implement your pricing strategy. These are the day-to-day methods you use to achieve your strategic pricing goals. Examples include: Flash sales and promotional discounts Bundle offers Seasonal price adjustments Limited-time offers Early bird pricing What is a Pricing Rule? A pricing rule is the concrete, automated formula or condition that executes your strategy and tactics. It's the technical implementation that determines exactly how prices are calculated and when they change. In dynamic pricing software like Omnia, this might look like: Strategy: Premium pricing (position 20% above market average) Tactic: Maintain premium during peak season, reduce during low season Rule: New price = Market average price × 1.2 So, based on this rule, the price will be calculated and set to be 20% higher than the market average that day. With Omnia, this can also be combined with conditions, filters, and more. The complexity of a rule is limitless. Why it matters: Strategies guide your overarching direction Tactics are used to boost results in specific scenarios Rules are how you scale and automate those decisions consistently By understanding this hierarchy, pricing teams can better structure their pricing architecture and ensure that every decision made aligns with long-term goals. Many retailers today use a hybrid approach that combines rule-based logic with algorithmic intelligence. For example, you might define rules to enforce brand pricing policies or maintain a certain price gap between SKUs, while also using machine learning algorithms to optimize prices for profitability or conversion based on real-time demand signals. This balance gives teams the control they need while benefiting from automation at scale. Top Pricing Strategies for Retail and E-commerce There are endless examples of pricing strategies in e-commerce, so we compiled a list of 17 common types of pricing strategies below, which we grouped into four categories: Psychological Pricing Strategies Dynamic & Data-Driven Pricing Strategies Competitive & Market-Based Pricing Strategies Promotional & Launch Pricing Strategies Psychological Pricing Strategies These strategies tap into consumer perception, emotion, and behavioral economics. Odd-Even Pricing Odd-even pricing falls under the category of psychological pricing strategies and taps into the psychology of numbers to influence consumer behaviour. Odd prices, like €5.99, are commonly used, but even prices, like €6.00, have their own psychological impact. This strategy can be employed in various ways, from offering strategic discounts to trying to create a memorable price point. For example, take a look at the difference between how luxury jewellery brand Tiffany & Co uses even pricing and more affordable brand Kay Jewellers uses odd pricing. Customers coming to Tiffany & Co. are looking for luxury items and are likely less price sensitive, so the company uses even pricing. Shoppers on the Kay Jewellers website may be more interested in finding a deal, so many of their prices use odd pricing and end in .99 or .95. Charm Pricing Charm pricing, also called psychological pricing, is similar to odd-even pricing, as it leverages pricing to evoke an emotional response and prompt action. This strategy is often observed in late-night infomercials, where potential buyers can be swayed by a price ending in “.99” or “.95” to make an impulse purchase. But infomercials aren’t the only place charm pricing is seen; many retailers use elements of this pricing strategy. There are a number of theories for why charm pricing is so effective: A perception of loss: This is when consumers value a product based on the loss they feel without it, rather than the gain. In the Western world, most consumers read prices from left to right, so there is a high likelihood of grasping the first number as an anchor. Under this theory, that’s why €599 would feel so different from €600, even though there is only a separation of €1. A perception of gain: On the other side, perhaps consumers feel they have gained something, i.e., saved money, when they see an example of charm pricing. If the higher price of €600 is the anchor, then the lower price of €599 means you gained something and saved €1. This theory pairs well with the .99 or .95 pricing, which may make a consumer think they’re getting a discount. Specificity: With a charm pricing strategy, the price of an item is so specific that it can trigger a psychological response in customers, who believe it must be priced at the correct value. This is especially relevant if pricing is fractional, meaning it ends in a cent value. Example: Uniqlo Although the apparel brand rarely has sales, they signify to customers that they are getting a good deal by ending almost every price in “-9.90” or “-4.90”. Premium Pricing Businesses using a premium pricing strategy want to keep their pricing levels higher than the competition. This can be paired with messaging and branding that shows customers why the higher price is justified. For a premium pricing strategy to work, sellers usually have to have some combination of a strong brand image, unique offerings, or innovative product attributes. Examples of companies with a premium pricing strategy include Rolex, Apple, and luxury fashion brands like Louis Vuitton and Chanel. Price Discrimination Price discrimination, also called price differentiation or differential pricing, is a strategy employed by e-commerce companies to maximise profits by charging different prices to different customers for the same product or service, based on characteristics of the customer. The objective is to extract the maximum amount of consumer surplus and capture additional revenue based on individual customers' willingness to pay. To use this strategy, sellers make use of their vast amounts of customer data, including browsing history, purchase patterns, demographic information, and geographic location. This data is leveraged to segment customers into different groups based on their preferences, behaviour, and purchasing power. Once customer segments are identified, prices can be tailored to each segment's characteristics. For example, customers who have shown a higher willingness to pay in the past may be charged a higher price, while price-sensitive customers may be offered discounts or promotions to encourage purchases. The success of price discrimination in e-commerce relies heavily on sophisticated data analysis and algorithmic pricing systems. By leveraging customer data and market conditions, companies can optimise their pricing strategies to increase revenue and overall profitability. However, it is important to note that price discrimination can also raise concerns about fairness, privacy, and potential consumer backlash if implemented in a way that is perceived as discriminatory or exploitative. Overview of Psychological Pricing Strategies Strategy Goal Best Used For Automation Level Example or Note Odd-Even Pricing Influence the perception of value Low- to mid-priced SKUs Low €19.99 feels cheaper than €20.00 Charm Pricing Create emotional appeal + encourage purchase Fashion, cosmetics, D2C Low to Medium “3 for €20” bundles or .99 endings Premium Pricing Signal quality, exclusivity, or luxury High-end brands, limited editions Low €199 instead of €179 to imply quality Price Discrimination Maximize margin from segmented buyers Region-based or loyalty-pricing Medium to High Charging more for the same product in different countries Dynamic & Data-Driven Pricing Strategies These strategies rely on automation, algorithms, and real-time data inputs. Dynamic Pricing Dynamic pricing is a strategy where prices are adjusted automatically and continuously in response to real-time data such as competitor prices, demand shifts, or inventory levels. For retailers, this helps maximize revenue opportunities, stay competitive, and align pricing with market conditions. Sometimes, people also use "personalised pricing" interchangeably with dynamic pricing; however, these two are quite different from one another. Personalised pricing, as opposed to dynamic pricing, focuses on the individual consumer's behaviour and adjusts product pricing based on their past shopping experience. When powered by automation, dynamic pricing software enables e-commerce brands to: React instantly to competitor changes Maximize profit margins without manual updates Run A/B tests to identify price elasticity Align price points with customer demand in real time Price Optimisation Price optimisation is a practice used in most e-commerce businesses that involves analysing data from customers and the market to calculate and set the optimal price for a product. The objective is to find the ideal price point to attract customers and maximise sales and profits. The types of data used can range from demographics and survey data to historical sales and inventory. Pricing optimisation is similar to dynamic pricing, but while the former can be more of a long-term process, the latter is built more for rapid change and adjusts pricing based on real-time data. Surge Pricing Surge pricing is a pricing strategy that temporarily increases prices in response to high demand and limited supply. It is used in many industries, from hospitality and tourism to entertainment and retail. Here are three common types of surge pricing: Time-based: Adjusts prices based on the time of day or during special events and expected or real-time high-demand periods. For example, online retailers raise prices between 9 AM and 5 PM when customers shop online during office hours, as well as during large, industry-relevant events, like the Olympics, for sporting goods sellers. Weather-based: Incorporates weather forecasts to determine pricing decisions. When favourable weather conditions are expected, prices are increased. For instance, if the weather forecast promises good conditions for the summer, prices for beach goods, summer apparel, and BBQs can be raised in anticipation of higher demand. Location-based: Adjusts prices based on the geographical location of the buyer. It is often observed in crowded cities or areas with high-income populations, where customers have a higher willingness to pay. Additionally, surge pricing may be used in places with above-average shipping costs, resulting in higher prices. Yield Pricing Yield pricing is a pricing strategy most often seen in the aviation and hotel industries. It involves pricing differently depending on when the customer makes the purchase. Airline seats, for example, are priced based on where you are in the booking period: Booking earlier gets customers a lower price, while late bookings are at a higher price point. This enables those airlines to avoid empty seats and lost profits. Overview of Dynamic & Data-Driven Pricing Strategies Strategy Goal Best Used For Automation Level Example or Note Dynamic Pricing React to market changes in real-time Fast-moving consumer goods, electronics High Adjusting prices based on competitor changes or demand Price Optimization Maximize profit through data-driven testing Enterprise retailers with high SKU count High A/B testing price points to find the revenue sweet spot Surge Pricing Capitalize on short-term spikes in demand Travel, events, seasonal retail Medium to High Raising prices during holiday season or peak hours Yield Pricing Maximize revenue based on capacity/duration Hotels, airlines, digital services High Pricing based on inventory status or time before use (e.g., flights) Real-time price changes create urgency and reinforce price fairness, especially in competitive verticals. When done transparently, they can increase conversions by showing shoppers they're getting the best deal available at that moment. However, inconsistent pricing without explanation can erode trust, which is why strategic communication and thresholds matter. Competitive & Market-Based Pricing Strategies These strategies respond to competitors or market position. Competitive Pricing One of the more common pricing strategies in e-commerce is competitive pricing, where sellers set their prices based on the prices of competitors. Competitive pricing is most often used by businesses operating in competitive markets or ones with fairly similar products and little differentiation, as all sellers are then trying to win over the same customers. A competitive pricing strategy does not always indicate undercutting the competition, but rather setting prices in relation to competitors; this could mean setting product prices lower, higher, or the same as competing sellers. Running a competitive pricing strategy with manual research can take a significant amount of time and is challenging in today’s fast-paced e-commerce environment. To make price adjustments for listings in real time, most companies use some type of Dynamic Pricing software. Value-Based Pricing Value-based pricing, sometimes called value-added pricing or perceived value pricing, is a powerful strategy that requires a deep understanding of the market and of the value your products offer to potential customers. Sellers can use value-based pricing to shape how consumers perceive their product. Want to position yourself as a luxury brand, or to be the best value-for-money option? Price accordingly. Implementing value-based pricing demands extensive research into your target market and what the competition is doing, as well as reflection on and alignment with your business objectives. It will require collaborative effort across the organisation, but can create a very cohesive and effective pricing strategy. Want to See How Pricing Strategies Come to Life in Practice? Schedule a pricing software demo Predatory Pricing A predatory pricing strategy in e-commerce refers to a practice where a company deliberately sets extremely low prices for its products or services with the intention of driving competitors out of the market or deterring new entrants. By selling products at a loss or below cost for an extended period, the predatory pricer aims to eliminate competition and subsequently raise prices once competitors have been forced out. Predatory pricing is often considered anticompetitive and is illegal in many jurisdictions as it violates antitrust laws created for consumer protection and to ensure market competition is fair. Overview of Competitive & Market-Based Pricing Strategies Strategy Goal Best Used For Automation Level Example or Note Competitive Pricing Match or beat competitors to stay relevant Commodity products, high-comparison items High Aligning prices to always be within 5% of your top 3 competitors Value-Based Pricing Align price with perceived customer value Brands with strong differentiation Medium to High Pricing a premium eco-product based on customer loyalty and quality Predatory Pricing Undercut rivals to eliminate competition New entrants disrupting a saturated market Low to Medium Temporarily pricing below cost to steal market share from incumbents Promotional & Launch Pricing Strategies Short-term strategies are used for entry, promotions, or volume. Bundle Pricing Bundle pricing, also called product bundle pricing, is a strategy companies use to sell more items with higher margins while giving customers a discount for increasing the size of their order. Products are “bundled” so customers receive several different products as a package deal, costing them less than it would have if they made separate purchases of the included products. This incentivises purchases by creating higher perceived value and cost savings. E-commerce companies typically select complementary or related products and combine them into bundles to encourage larger purchases, increase average order value, and enhance customer satisfaction. By offering discounted bundle prices, companies can attract price-sensitive customers, drive sales of slower-moving products, and create a competitive advantage in the market. Promotional Pricing A promotional pricing strategy in e-commerce involves offering temporary price reductions or discounts on products or services to create urgency, stimulate sales, and attract customers. The primary goals are usually to increase sales volume, clear out excess inventory, introduce new products, or gain a competitive advantage. Promotional pricing can take various forms, such as percentage discounts, buy-one-get-one (BOGO) offers, limited-time sales, flash sales, coupon codes, or free shipping. These promotions can be advertised or offered through any channel, from email marketing and social media to online ads or on-site banners. Penetration Pricing A penetration pricing strategy is often employed by online sellers and business owners to attract customers to new products being brought to market. It involves offering an initial lower price than competitors to entice more buyers to purchase. The goal is to secure market share, undercut established sellers in the market, and attract new customers who will remain loyal, even after prices are adjusted back up. For this e-commerce pricing strategy to succeed, however, there must be a high demand for the product. Without a significant market, penetration pricing becomes less effective. It's also important to make the price increases gradually to avoid competitors implementing their own penetration pricing tactics and stealing customers. Businesses employing a penetration pricing strategy will need price monitoring software to track and analyse average market prices over a set time period, then use the data to calculate introductory pricing. Price Skimming With a price skimming strategy, the product is initially priced high and then reduced later on, rather than starting with a low price like penetration pricing strategies. This approach aims to maximise short-term profits and segment customers based on how much they are willing to pay, and is often used for innovative products and products with high demand. The top level of customers, the most loyal ones, will buy at high prices. The seller can then continue accommodating new levels of potential customers by gradually lowering (“skimming”) the price. This practice continues until it reaches the base price. Price skimming can be a great way to quickly generate revenue and even break even with a lower number of sales, but companies must be able to rationalise the high price point, especially if the market is saturated and customers have other low-priced alternatives to choose from. One real-world example of a price-skimming strategy is Samsung. When a new mobile phone release is planned and demand is high, the price is set higher to bring in more revenue and capture market share and attention from competitors like Apple. The newest model above, for example, retails for as much as €1.819,00 to start. After the demand and hype lessen, the company skims the price back down to reach more customers. Samsung Galaxy phones, for example, are priced to capture share from the iPhone. Loss-leader Pricing Loss-leader pricing, often used as part of a penetration pricing strategy, involves intentionally selling certain products at a loss to attract customers and stimulate additional sales of other higher-margin products. The purpose is to entice customers with attractive prices on popular or essential items, with the hope or expectation that they will make additional purchases of complementary or higher-priced items. While the initial product may be sold at a loss, the strategy aims to generate profits through the sale of accompanying products or services. Effective implementation requires careful product selection, pricing analysis, and understanding of customer behaviour to ensure the overall profitability of the business. Honeymoon Pricing Like penetration pricing, honeymoon pricing sets the initial product price low during launch to attract customers. This strategy is common in subscription models, where a low-priced starter offer entices customers who must then be retained. Retaining customers in this model can be achievable, however, since switching providers may be expensive or require too high a level of customer effort. Overview of Promotional & Launch Pricing Strategies Strategy Goal Best Used For Automation Level Example or Note Promotional Pricing Stimulate sales through limited-time offers Sales events, seasonal campaigns Medium to High 20% off during Black Friday or end-of-season clearance Penetration Pricing Gain market share with low introductory prices New product launches, entering competitive markets Low to Medium Launching at €9.99 to attract early adopters Price Skimming Maximize margin early before dropping price Tech, innovation-led products Low €399 launch price gradually reduced to €299 over time Loss-Leader Pricing Attract traffic with low prices on key items Brick-and-mortar and e-commerce storefronts Medium Pricing milk or earbuds below cost to drive footfall or conversion Honeymoon Pricing Build loyalty through early discounts Subscriptions, memberships Low to Medium “First 3 months for €1” for a streaming or delivery service Bundle Pricing Increase AOV by packaging products together D2C, consumer electronics, beauty Medium “Buy shampoo + conditioner together for €15” How to Find the Right Pricing Strategy for Your E-commerce Business Choosing the right e-commerce pricing strategy requires careful analysis and consideration, and it’s worth noting that most sellers use some combination of strategies. Here are five key steps to guide your research and discussions as you build your pricing strategy: Understand your market and customers: Conduct research to gain insights into customer preferences and market dynamics. Analyse costs and profit margins: Evaluate expenses and calculate desired profit margins to assess feasibility. Consider your business goals and value proposition: Align pricing with your objectives and unique value proposition. Test, monitor, and adapt your strategy: Implement and continuously evaluate your pricing approach to optimise results. Stay agile and regularly evaluate pricing against competitors: Keep an eye on the market and adjust pricing as needed to remain competitive. Over time, pricing strategies must adapt and evolve, both to keep up in the market and to meet the needs of the brand and product assortment. As you build, implement, and execute your pricing strategies, Omnia Retail can seamlessly automate any strategy you choose, blending any combination of rules with advanced Machine Learning and AI algorithms. Put These Pricing Strategies to Work—Schedule a Demo With Our Consultants Get in touch Learn more about our revolutionary and intuitive approach to Dynamic Pricing here. What is Price Monitoring?: Check out everything you need to know about price comparison and price monitoring. What is Charm Pricing?: A short introduction to a fun pricing method. What is Penetration Pricing?: A guide on how to get noticed when first entering a new market. What is Bundle Pricing?: Learn more about the benefits of a bundle pricing strategy. What is Cost Plus Pricing?: In this article, we’ll cover cost-plus pricing and show you when it makes sense to use this strategy. What is Price Skimming?: Learn how price skimming can help you facilitate a higher return on early investments. Frequently Asked Questions How often should I change my e-commerce pricing strategy? Review your pricing strategy quarterly, but make tactical adjustments monthly or even weekly using dynamic pricing tools. Major strategy shifts should happen 1-2 times per year, while price optimizations can be continuous with the right software. Read More How often should I change my e-commerce pricing strategy? Can I use multiple pricing strategies simultaneously? Absolutely. Most successful e-commerce businesses use 3-5 pricing strategies across different product categories. For example, premium pricing for flagship products, bundle pricing for accessories, and promotional pricing for seasonal items. Read More Can I use multiple pricing strategies simultaneously? What is the difference between dynamic pricing and automated pricing? Dynamic pricing adjusts prices based on real-time market data, demand, and competition. Automated pricing simply executes pre-set rules without market intelligence. Dynamic pricing is smarter and more responsive to market conditions. Read More What is the difference between dynamic pricing and automated pricing? What's the biggest mistake e-commerce businesses make with pricing? Setting prices based on gut feeling rather than data. The second biggest mistake is implementing a strategy without proper monitoring and adjustment capabilities. Read More What's the biggest mistake e-commerce businesses make with pricing? Should I use different pricing strategies for different countries? Yes, pricing strategies should adapt to local markets. What works in the US may not work in Germany or Japan due to different consumer behaviors, competition levels, and economic conditions. Read More Should I use different pricing strategies for different countries? How long should I test a pricing strategy before deciding it's not working? Give pricing strategies at least 4-6 weeks to show results, but monitor daily for any negative impacts. Some strategies (like premium positioning) may take 2-3 months to show full effects. Read More How long should I test a pricing strategy before deciding it's not working?

Top 17 E-Commerce Pricing Strategies for Retailers and Brands

How pricing influences the consumer decision making process

Pricing has a major influence on a consumer’s decision making process and if you know how to take advantage of this, you can increase both sales volume and revenue. This is because there are a few key factors that a...

Pricing has a major influence on a consumer’s decision making process and if you know how to take advantage of this, you can increase both sales volume and revenue. This is because there are a few key factors that a pricing strategy can impact to make that decision making process work for you as a retailer, or as a brand with a direct to consumer channel. Before we dive in and look at the effects of pricing itself we need to identify the two decision making styles people have as well as the five different steps consumers follow when making a purchase decision. We can then map pricing rules to key moments in this decision making process. System 1 and System 2: A consumer has two thinking styles they can use to come to a choice. Kahneman (2011) wrote about these two systems in his book Thinking Fast and Slow and describes them as System 1 thinking and System 2 thinking. System 1 thinking refers to our intuitive system, it is fast, automatic, effortless, implicit and emotional. System 2 thinking refers to reasoning, it is slower, conscious, effortful, explicit, and logical. People are more likely to rely on their System 1 thinking when products are cheaper and less impactful to their lives or when the decision makers are busier, more rushed, and when they have more on their minds. Our System 1 thinking is quite efficient, it would be impractical to logically reason through every choice we make while we are making menial purchase decisions. System 2 logic is often active in consideration of our more important, more impactful, and more expensive decisions. Which of these two systems is used depends on the type of product and the situation the consumer is in. A consumer will make a quick and fast choice if they need a pair of socks for example. In these instances a quick decision is made without a big time investment and this is often a retailer’s long tail of products. If, however, a consumer needs to purchase a house, car or new TV they will most likely go with System 2 thinking. The consumer decision making process: Having discussed the thinking styles, let's discuss all the steps a consumer goes through when making a decision. Most obviously within the second system the decision making process can be split in five steps. These five steps range from not knowing what to buy, to the retrospective evaluation that follows the eventual purchase decision. These five steps were originally proposed by John Dewey in 1910 and still function as an important theory within consumer behavioral models. The five steps are as follows: 1) gathering information 2) evaluation 3) action 4) implementation 5) evaluation of decision outcome. In step one, our model consumer gathers the information needed to make an evaluation. In this step they initially have to define the problem for themselves. Imagine our consumer’s TV breaks down a week before the World Cup. The defined problem is that they do not have a working TV anymore and will not be able to watch the highly anticipated international tournament as expected. Then the consumer identifies the decision criteria and weighs these criteria, for example the size of the TV, the audio quality, the amount of money they want to spend, and the usability of the TV after the World Cup to name a few. Before they start to evaluate the options they will first evaluate the alternatives. You could watch the football on your work laptop, in a pub, or at a friend's place. Accordingly, the consequences of the alternatives are assessed. If you go to the pub for example, you still won't have a working TV, irrespective of the World Cup. Once all of these criteria have been assessed, step two kicks in. In step two, the evaluation process begins. The consumer judges all available options collected during step one to then calculate the optimal outcome for themselves. They will look at the TV, listen to the TV, compare prices, etc. with the end goal of finding the TV with the highest utility for themselves. Step three is simply the decision making itself. Our example consumer will choose the option that has the highest outcome or utility to them. From a retailer’s perspective this means that not only a product itself is selected, but also the store at which the desired product is purchased. This is a key distinction because you want the purchase to happen at your store or webshop, not at the store or webshop of a competitor, irrespective of which TV is chosen. Step four is the actual execution of the decision, also known as the implementation. In this step, the consumer will actually execute the decision made in step three. Our model consumer will go to your webshop and leave the webshop once they have paid for the TV and have the delivery date confirmed in their mailbox. If of course yours is the right price. Last but not least, in step five, the retrospective purchase evaluation takes place. Our model consumer will evaluate their decision to see if they bought the right TV or if they made any mistakes during steps one and two. They will decide if they need to correct these mistakes, or in some cases, if any of the criteria or available options have changed since they made their decision. This is an important step, especially when looking at the ratio between the customer lifetime value and the customer acquisition cost. It also influences repeat purchases, the price perception your customers have and defines your relationship with the customer. Are you interested in how Omnia Retail can help you increase profitability with any of these strategies or business rules? Contact us Where does pricing come in? Now that we have discussed both systems and the consumer decision making process we can look at the effects of pricing. Margin increase for long tail products: For the long tail of products, System 1 is active and as such consumers will quickly skip through the five steps, if they use them at all. For these products, you can increase your selling price to a sustainable level to increase your margin. Consumers will most likely not put the same weight on the product price and they will not re-evaluate the purchase afterwards. The impact of these purchases is not high enough to warrant that kind of financial nor time investment. This allows you to increase profitability without increasing product returns or creating a bad pricing image in your consumers’ eyes. Examples of pricing rules in this area are margin uplift based on stock, product views, and/or selling price until an equilibrium or the RRP is reached. Creating visibility for high runner products: For larger, more impactful purchases, for which System 2 is relevant, consumers will run through the five steps. Therefore, you want to ensure price is not a negative influence on the consumer's decision making process. A great example of products for which System 2 thinking is used are high runner products. For a quick overview of a high runner strategy please check out this article on “What is a high runner strategy?”. For these high runner products, pricing is one of the key influencing factors in the purchase decision. An important distinction to make is the difference between the product choice and the vendor choice. At all steps price influences which product a consumer will choose and how they will feel about that purchase afterwards. While only at steps three and five will pricing influence at which store or webshop the product will be bought and how they will feel about your shop afterwards. Therefore dynamic pricing should primarily focus on the impact pricing has on vendor choice where you want to use pricing to make a consumer choose for you over one of your competitors. All else being equal, the consumer will most likely go for the cheapest option. Meaning that it is essential to be competitive for these high runner products. However, service, delivery terms, etc. will also be of influence and can set you apart. These additional services also have an impact on your pricing image from the consumer’s perspective. Examples of pricing rules are setting your price equal to key competitors if available and setting them equal to market average or slightly above tier two or tier three competitors so your combination of product and additional services offers the highest utility to the consumer. Maintaining the feeling of value for your consumers in the evaluation: In step five it is essential that during the retrospective evaluation period, the consumer will not find a significantly better option that provides them with more utility. Examples are price drops a couple days after the purchase or the release of a newer, better product for the same price. The result is that a consumer might reconsider their choice, send back the product, and make a new purchase decision. Therefore you want to minimize significant price drops and offer compensation for large price decreases in your store to customers still in the evaluation period. This will reduce returns, unhappy customers, and will have a positive effect on repeat purchases with you as a vendor. Rules that one can implement here focus on promotion pricing where you could drop the price of products near the end of the product lifecycle to give consumers the feeling they still get value out of last generation's product. Next to all mentioned rules, safety rules are always a good idea so you never price above RRP or below your minimum margin price, making the system work for you without risk. How to capitalize on the consumer decision making process in your pricing strategy? Omnia allows you to easily set your own rules to both generate uplift on these long tail products as well as be competitive on high runner products compared to your key competitors, or the entire market if desired. Implementing any of the strategies mentioned in this article is very straightforward with a pricing tool such as Omnia. Dynamic Pricing with Omnia is able to capitalize on the combination of timely competitor data, giving an outlook on the market that can be used as input for any pricing rule, and your own internal data such as page views, stock coverage, conversion rates, high runners and more. This can be done either through feeds or Google Analytics for example. Interested in how Omnia Retail can help you increase profitability with any of the mentioned strategies or business rules? Contact your dedicated solution consultant if you are a customer or request a custom demo for your assortment!

How pricing influences the consumer decision making process

Should Dynamic Pricing Change Your Company's Pricing Organization?

How to set up your organization's pricing team? Within our customer base we often see that a dynamic pricing initiative supported by software implementation is a moment to rethink pricing responsibility. Historically...

How to set up your organization's pricing team? Within our customer base we often see that a dynamic pricing initiative supported by software implementation is a moment to rethink pricing responsibility. Historically pricing often fell within the domain of the buying department. But with an ever growing emphasis on margin vs revenue and price change frequency it is smart to think about who should be using a pricing tool and ultimately be responsible for pricing. Should it be the buying department, a dedicated pricing team or another option altogether? This article dives into the three different flavors of organizational setup we see within the Omnia customer base, each with their own advantages and disadvantages. Data driven category managers In the first of these three organizational structures the responsibility lies with the buying department/category managers. This implies that the party responsible for choices on assortment, merchandising, buying and pricing remains responsible for pricing. The advantage here is that there is a strong link between pricing and key topics such as assortment or negotiating better purchase prices from suppliers, which also falls under the responsibility of buying. Keeping this responsibility in one decision making unit increases the likelihood of driving synergies. Next to that this option does not require a high investment in your team as these buyers/category managers are most likely already responsible for price changes. This would allow them to spend their time on a strategic level instead of on manual price changes. A potential disadvantage is that buyers within the more traditional buyer profile are not always data-driven and might need training to be comfortable to think more in explicit pricing strategies as well as automating those in tools. Next to that you need a clear owner of the tool to manage the daily operations and settings of the pricing software. That being said, the Omnia portal is designed with ease of use as one of its key value propositions. Dedicated pricing team Pulling the pricing responsibility away from buying/category management and placing it into a dedicated pricing team is the second possibility. The major advantage of this strategy is that pricing is done by specialists, which can increase speed of learning and strategic improvements. Improving the sophistication of your pricing strategy and the potential value you could get from a dynamic pricing tool. A potential disadvantage is that this setup can lead to organizational challenges, or even tensions, where category managers still have margin targets, but they can not decide directly on a key driver of that margin; pricing. This means that as the positive externalities fall away it will also be more difficult to realize benefits such as category managers using data to do data-driven negotiations with suppliers, assortment optimizations, etc. Combined superpowers The third approach is a hybrid one where the accountability remains at buying/category management, but there is a central Pricing Team (or single Pricing Manager) that is responsible for the execution of the strategy and the daily operations of the software. This pricing team or manager is advising the buyers/category managers on the settings and strategy. The role of the category manager is to define what competitors to track and how to weigh them, set contribution margin targets, determine rounding logic etc. This setup has a key advantage over the other two setups where such a centralized role (or even team) can take the lead on pricing, train the team to use the tool, and facilitate knowledge sharing among category managers. This creates more uniformity and a clearer overarching pricing strategy as well as that the positive externalities, such as data driven negotiations in the buying department, remain in place. In a sense, it combines the advantages of both previously discussed setups. As sadly no setup is without disadvantages, this setup also has two. First of all the responsibility distribution can become vague and this distribution needs to be clearly outlined from the get go. Secondly, it requires a higher investment in your company's team than having just category managers but it could be well worth the investment if the budget allows it. Which flavor is right for you? All three flavors can work and, as with everything, it also is a question of proper execution. Important inputs for this decision are what the typical profiles of your current category managers are, thus are they data driven or not and have they worked with pricing strategies before? Next to that it’s important to know the time frame in which you want to implement a pricing tool as well as the willingness to invest in a pricing team. Irrespective of your setup, the automation of a dynamic pricing tool will ultimately lead to more time spent on optimizing the pricing strategy, instead of manual price changes. Therefore it is not about saving FTEs but about ensuring those FTEs work on a more tactical and strategic level, making them as effective as possible.

Should Dynamic Pricing Change Your Company's Pricing Organization?

Meet the Team: Martijn Crooijmans

In this edition of Meet the Team we have Martijn Crooijmans in the starring role. Martijn is one of our fresh Junior Consultants within our new traineeship program. What is your favourite quote? “If you put your mind to...

In this edition of Meet the Team we have Martijn Crooijmans in the starring role. Martijn is one of our fresh Junior Consultants within our new traineeship program. What is your favourite quote? “If you put your mind to it you can accomplish anything”, which is a quote from back to the future, but I feel like it’s mostly true. What is your top-3 favorite books or podcasts? The “Velocast”, a cycling podcast and a fun and easy way to follow the cycling world. “Business adventures”, a book on, well, business adventures. And “WeCrashed” which is a short podcast on the crash of WeWork and quite interesting to go through. What do you do at Omnia Retail? As I am currently in the traineeship I will cycle through multiple different activities throughout the year. Right now I am working within customer service mostly. This allows me to get to know the product and our customers. Next to that I am joining in on consulting work and customer success work for some customers. Next month I will trade these activities in for a couple months of sales to see how things are going in that department. What is something people in your industry have to deal with that you want to fix? That is a great question but with my three months of experience I don’t think I have seen enough issues yet to know which ones are the most frequent and important. I guess more automation as computers don’t make mistakes once everything is set up properly. But in which area and how are questions for a later date. What are your credentials/past experience, for working in your position? As this is a traineeship/junior function my past credentials are fairly limited. Before I worked at Omnia Retail I followed a bachelor in Management and Marketing in Wageningen and a master in Business Development and Entrepreneurship in Utrecht. I wrote my thesis on SaaS companies and did business analyses for an IT company. So this traineeship at a Saas and tech company was a logical next step. What do you like about working at Omnia Retail so far? The culture for sure. You can’t just walk up to a colleague at work with questions as everybody is working from home. So the fact that everybody is really helpful and goes out of their way to help you by setting up digital meetings is great. Everybody just feels accessible. What are the values that drive you? I really appreciate it when things go efficiently and effectively as well as level-headed people. What do you enjoy doing when you are not working? As the podcast could have indicated I enjoy going for a cycling ride every once in a while and I really enjoy swimming. Next to sports I enjoy watching a good movie or meeting with my friends, even though that last one is a bit difficult these days.

Meet the Team: Martijn Crooijmans

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