April 9, 2019
Pricing: this is an issue any company struggles with, whether it’s big or small. Lots of care, thought, and deliberation is put into your product, so naturally, you want to put a high price tag on it. But, of course, there’s a fine line that may be crossed when considering any type of pricing.
Put the price too high, and you risk no one buying your item. This leaves you with a warehouse full of product and lots of overhead to pay for. Plus, unnecessary discounting in the future.
Put the price too low, and your product might fly off the shelves. Whether it does or not, you still have significant overhead that’ll eat into profits.
So if there was a way to manage your inventory while keeping up with customer demand, you’d take it, right?
This is possible with a predictive supply chain. This “crystal ball” has the potential to allocate your products across stores based on their expected potential, which means a good competitive pricing strategy would be in place. By taking your inventory into account in real-time and distributing your products accordingly, you’ll eliminate the need for markdowns and maximize profits.
Customer demand vs. customer desire
The first thing you need to understand is the difference between customer demand and customer desire. The distinction is nuanced, but definitely there. By learning to differentiate between the two, you’ll have a leg up already.
First off, customer desire is the need for whatever you’re selling. If you’re in the right place at the right time, with the right product, and pitching to the right people, desire will be high.
Customer demand is how urgent and desperately people want your product. Therefore, this can wax and wane depending on your marketing and pricing strategies. You need customer desire to drive customer demand; this can be done with predictive analytics to avoid waste.
So if you believe you have a good product, filling a niche is only the first step. The next step is to drive enough customer demand to increase your ROI.
What is dynamic pricing and why is it important?
Dynamic pricing is where your products don’t have a fixed price. Essentially, it’s the opposite of being static.
Of course, practically all merchandise changes prices at some point or another, but dynamic pricing is different. It’s price adjustments that happen in real-time according to metrics and data analysis, especially in regards to how much inventory you have at any given time.
Dynamic pricing is important because the scale of pricing and inventory quantity is forever wavering. When you use a predictive supply chain, you can take control and actually shape customer demand, meaning you stay in control of dynamic pricing.
Stay one step ahead of your competition
Some may be skeptical of dynamic pricing because it seems like you have no control over your pricing strategies at all. But in reality, that’s not true at all. Like we said earlier, it gives you full control of your competitive pricing strategy, allowing you to stay ahead of everyone else in the industry.
With a predictive supply chain, the pricing and inventory scale will never become unbalanced, since you’re shaping customer demand. The powerful machine learning will relieve your data scientists so they won’t have to manually crunch the numbers either.
Instead, they’ll get the full picture:
Automated assessment of product potential, advanced segmentation, forecasting of sales, and KPI workout. The predictive supply chain will take real-time big data from the market, customers, and other places to create an overall picture to give you market-driven optimal prices.
Harness the power of your first-party data
Since you’re already collecting data on your customers, why not put it to work? Many businesses don’t realize the power of the information they already have. Feed that first-party data, plus your own data into a predictive supply chain and take your industry by storm.
Ready to optimize your pricing? Learn more about Evo Pricing.
About the author
Over the last 5 years, Eliot Morgan has transformed his obsession for words into a 6-figure online copywriting business – his clients, like Evo, enjoy increased traffic, customers and revenue as a result.
When he’s not behind the keyboard, he can be found Salsa dancing with his girlfriend in Colombia.