Seasonal pricing is essentially when the prices of goods or services are variable with different seasons during the year. It is simple in its definition but far from it in its implementation. The purpose of seasonal pricing is to maximise profits during high-demand periods so that any excess in profit can offset possible losses in low-demand periods. It is essential to do this in order to guarantee a company’s profitability and being able to remain open and operational even during a lull.
Knowledge is Power
Businesses should be acutely aware of what competitors are doing and ensure they position themselves to be more attractive than their competitors are. Sometimes, businesses might choose to pitch their prices just low enough to entice customers while still maintaining a healthy profit margin. This is called industry price benchmarking and is endorsed by all the major retailers.
Dynamic pricing is the constant changing of prices. In Amazon’s case, this is done on average every 10 minutes. Although this might seem confusing, dynamic pricing is very effective and largely well-received by customers. However, it must be instigated correctly, and this involves always achieving a profitable baseline. It is also imperative to ensure your business model can support demand such as having ample personnel and stock on hand for the peak seasons.
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Seasonal Pricing Tips
- Incorporate real-time pricing that is capable of changing prices immediately to optimise peak periods such as around events, trends, endorsements or seasons.
- Urgency is an age-old selling tactic that still works today. Do not shy away from telling customers that the price today is the best they will find.
- Offer rewards and incentives. Sometimes, the draw card is not simply lower pricing, but rather what value the customer perceives they are gaining and how valuable they feel to the company.
- Build a customer-centric pricing strategy where customers and buying trends influence the inventory range, price, marketing and any add-ons such as online shopping with same-day delivery and other perks.
Many of the points mentioned are far easier to put into action with the help of inventory management software. The software facilitates real-time pricing, inventory tracking and the provision of multi-buy options and customer purchasing trends allowing for a customised pricing strategy. It is important to leverage what you can remain competitive and profitable in a highly dynamic market.