With this pricing strategy, you may set flexible prices for your goods and services based on factors such as market demand and your competitors’ pricing. For example, based on the increased demand for sanitizers, masks and similar protective products in the market during the COVID-19 pandemic, sellers dramatically increased their prices initially, before the Government had to intervene and declare price caps in public interest.
Also known as demand pricing, surge pricing and time-based pricing, the dynamic pricing strategy is most commonly used by event venues, hotels, utility companies and airlines. They use dynamic pricing and repricing algorithms
(changing prices based on predictions made using logical rules) that predict to collect competitor-pricing data and make real-time changes to the price of their products/services.
You can use re-pricing algorithms and adjust your pricing based on different fluctuations in the market. For example, several rideshare apps use dynamic pricing to incentivize drivers to stay on the road during peak hours.