Pricing on Point: The Art and Science of Dynamic Pricing

Introduction

A dynamic pricing model, or surge pricing, is a pricing strategy that adjusts product prices to maximize a business goal in a constantly shifting market. These adjustments can occur in real-time or at a set frequency within the business context.

This article will guide us through the evolution, case studies, benefits, and methodology of dynamic pricing. In the next article, I’ll provide a detailed walkthrough of the code steps, including the algorithm and the pricing optimization logic.

Evolution

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Dynamic pricing isn’t too new. Going back in history, we can see dynamic pricing where merchants would haggle over prices based on demand, supply, and even geopolitical conditions! Fast forward to today’s digital era, where dynamic pricing has become smarter and more sophisticated, thanks to technology and data science.

In the digital marketplace, prices don’t just stay fixed. They dance to the tune of supply, demand, competition, and even your behavior as a shopper. Whether you’re booking a flight, ordering a ride, or shopping online, dynamic pricing silently…