Everything you need to know about dynamic pricing in WooCommerce

If you run a WooCommerce online store, you want to ensure your offer is attractive and easily visible to your potential customers. This is what dynamic pricing is about – with this service, you can maintain good visibility and relevancy to your customers. Let’s see how dynamic pricing in WooCommerce works.

Running a successful online store is a multi-faceted and challenging task. One of the elements you need to take care of is an effective pricing strategy that’s profitable to you and attractive to your customers. This is something dynamic pricing can help you with.

What is dynamic pricing, and how does it help increase sales in your WooCommerce store

Put shortly, dynamic pricing in WooCommerce is an advanced pricing strategy that uses AI algorithms that monitor market conditions as well as your customers’ behaviors and use this input to set and maintain optimal prices in your online store. These algorithms constantly adjust prices (based on pre-defined rules) to ensure the good visibility of your offer. Dynamic pricing is especially helpful if you showcase your offer in price comparison engines like Google Shopping and marketplaces like Amazon.

This short example shows how dynamic pricing in WooCommerce works:

In the initial situation, BuyTV’s offer is the most expensive one. As a result, for a customer who filters products from the lowest price, their offer is not easily visible. Now, imagine BuyTV.com lowers the price by just 2.01 EUR. Now, they are in the first position and, most likely, sell more TVs thanks to better exposure. That’s what dynamic pricing does for you automatically. This tool continually looks for opportunities to adjust the product price so that it’s optimal in specific market conditions.

If you run a store on WooCommerce, you can easily implement dynamic pricing in your store. We’ll talk about that in a moment.

Benefits of using Dealavo’s Dynamic pricing feature

With this advanced solution, you can achieve four crucial benefits for your WooCommerce store:

• Higher profit margin (if possible, dynamic pricing algorithms can increase your prices!)
• Huge time savings (you don’t need to analyze your competitors’ offers manually)
• The end of price wars (dynamic pricing won’t go below your minimal price)
• Automated pricing strategy (you don’t have to think about each product’s ideal price)

How to set up dynamic pricing in your WooCommerce store

Everything is done through a WooCommerce plugin that’s made available to every Dealavo client. In general, each client needs to provide the following data:

• Product name
• EAN (CounterPrice only)
• Product ID from Woocommerce
• The gross purchase price is also highly recommended

Strategies for maximizing profits by tailoring dynamic prices to target customers

To maximize profits through dynamic pricing, you must tailor your strategy to your target audience. One element to consider is customer segmentation. By categorizing individuals based on factors such as their browsing history, purchase behavior, and demographic information, you can set prices dynamically to offer personalized discounts or tailor-made offers, thus encouraging customers to place more orders.

Additionally, dynamic pricing for WooCommerce can be optimized based on other elements like time of day, location, and even individual customer history, ensuring that the right price is presented to the right customer at the right time.

Best practices for monitoring changes in customer behavior

You need at least one advanced web analytics tool that will give you more input on your customers’ behaviors and trends. Google Analytics is potentially the best option, especially given it’s available for free. 

Analyze the feedback from this tool regularly to stay on top of things and adjust your prices accordingly. Keep in mind that e-commerce is a living thing; prices and offers can change almost overnight, and you need to be ready to respond to changing market trends. This includes several elements, especially:

• Political and social situation (e.g., growing inflation can adversely impact sales in your store)
• Seasonal changes (some products simply do not sell well when it’s not the season for them)
• Product availability (depending on how many vendors you have and how good your supply chains are, you can still see occasional drops in the availability of some products)
• Competitors (if a new competitor enters your market, you may be forced to improve your offer to compete with them)

HOW TO TAKE ADVANTAGE OF SEASONAL DEMAND WITH DYNAMIC PRICING RULES

Let’s use a simple example to see how you can use dynamic pricing to make the most of seasonal demand. If you run a car tire store, you may see a downward trend in summer tire sales in winter. It’s a good moment to think about lower prices for such tires at this specific time of the year. However, not only can you create a special promotion, but you can also adjust dynamic pricing rules to focus on the products that are more popular at the moment and lower prices for the products that are not.

As a result, you can maintain attractive prices and stable sales throughout the year, whether it’s low season or not.

Key metrics for evaluating the efficiency of dynamic pricing in your WooCommerce store

There are three basic metrics you should track when using dynamic pricing in WooCommerce:

1. Profit margin: It’s the difference between the selling price and the cost of goods you sold. Measuring your profit margin will help you determine if dynamic pricing is making your business more profitable.
2. Price elasticity: It measures how sensitive customer demand is to changes in price. By analyzing this metric, you can determine the optimal price point and then set dynamic pricing algorithms accordingly.
3. Conversion rate: It’s the percentage of potential customers who make a purchase. Monitoring how dynamic pricing affects conversion rates will help you assess if it helps you get more customers.

Summary

Dynamic pricing in WooCommerce can be a real game-changer for your store. With this service, your offer is more profitable, and you save a lot of time. We encourage you to find out more about dynamic pricing in WooCommerce.