Dynamic pricing, sometimes known as real-time pricing, is a very flexible method of setting the price of a product or service. Dynamic pricing enables businesses that sell goods or services to modify prices in real time in reaction to market conditions. Pricing bots, which are software agents that collect data and apply algorithms to adjust pricing in accordance with business standards, are in charge of changes. Typically, business rules consider the customer's location, the time of day, the day of the week, the level of demand, and the pricing of rivals. However, with the advent of big data and big data analytics, it is possible to fine-tune business rules for price modifications. By gathering and evaluating data on a specific client, a vendor can more precisely estimate the price at which the customer is willing to pay and alter rates accordingly.

When and how to apply Dynamic Pricing:

Dynamic pricing is a pricing strategy that uses variable prices as opposed to fixed ones. Instead of deciding on a single price for an entire season, retailers can adjust their prices multiple times per day to take advantage of the market's constant flux.

Dynamic pricing often gets confused with personalized pricing. However, these two distinct pricing structures are vastly distinct from one another.

Simply put, dynamic pricing considers the relative value of your products in relation to the rest of the market. Personalized pricing, on the other hand, examines individual consumer behaviors and determines (and alters) a product's value based on previous shopping experiences.

Well-known companies that use this pattern are easyJet and Uber.