The Configuration Guide

We’ve compiled the results of our research and created a guide to both product- and attribute-based configuration, showing you the reality of each option, and outlining why attribute-based configuration is the right choice to future-proof your tech stack.

B2B pricing strategies are in a state of constant flux.

The number of businesses deciding to implement a dynamic pricing strategy has been on the rise for quite a while. As business technology improves, it has gotten better at managing different kinds of dynamic pricing strategies, become more widely available, and grown increasingly well-known. All these things lead to wider adoption of the technology.   

However, some of the businesses using a dynamic pricing strategy and the ways they have chosen to use it have made it a bit of a hot topic lately. It isn't often that business technology terms come up in pop culture, but this is one of the rare occasions when these two seemingly unrelated arenas intersect.

While many businesses may be familiar with dynamic pricing, for a lot of the general public, they've only recently encountered the term thanks to articles about Taylor Swift of all reasons. There was somewhat of an upset due to a particularly negative experience that some of her fans — known online as Swifties — had when trying to purchase their tickets through an online ticketing site.

While dynamic pricing wasn't actually the cause of the dispute, the negative attention received by the ticket site in the wake of the controversy brought the entertainment behemoth's business practices under harsher scrutiny. One such business practice was — you guessed it — dynamic pricing.

With the ticket giant's every move being put under a microscope, dynamic pricing was one of the things that much of the media began to focus on. This has led people to ask some good questions about the company and its pricing strategy. We'll do our best to answer them here.

Some of the questions we'll try to cover include:

• What is dynamic pricing?
• What are the advantages and disadvantages of dynamic markets?
• True or false: Dynamic pricing typically benefits consumers?
• And of course, what does any of this have to do with Taylor Swift?

The concept should be easier to understand after learning the dynamic pricing definition and examples that illustrate it. Let's begin by defining the term. At its core you can think of dynamic pricing as simply a pricing strategy wherein the cost of the item may change. Obviously, that's a pretty broad definition.

It can apply to any situation from haggling to bulk pricing where the more you buy, the more you save, and auctions where you bid on items in competition with other buyers. Having a definition that encompasses so many different scenarios can make the term seem a bit nebulous.

While you can find examples of dynamic pricing in marketing, at garage sales, and everywhere in between, we're going to focus mostly on uses related to business software since that's squarely in our wheelhouse. We'll start with the example of dynamic pricing which is likely the most well-known.

The example of dynamic pricing most people will be familiar with is when shopping for customizable products. Often using guided selling, many eCommerce stores that allow customers to tailor products to their needs use a dynamic pricing model to adjust the final cost based on the custom elements chosen.

Those types of online pricing examples are rather straightforward and easy to understand. However, there are more complex ways to use dynamic pricing. The dynamic pricing definition Ticketmaster falls under is when you use market forces like supply and demand and competitor prices as variables to automatically update prices to reflect real-time market conditions.

When Swifties showed up on the ticketing site to get seats for upcoming Taylor Swift shows, there were too many visitors for the site to handle leading to long waits and leaving many Swifties unable to complete the checkout process successfully. Many have said this poor infrastructure is caused by the ticketing site having a monopoly on ticket sales and having no reason to upgrade their tech to compete.

In the discussions about the company's tactics, people began pointing to dynamic pricing examples the company has been criticized for previously. They use customer demand to determine their ticket prices for certain seats, leading to skyrocketing costs for seats to popular shows.  

Many critics have denounced the practice as unethical while other parties say it's simple supply and demand. So, why use dynamic pricing if it's stirring up so much controversy? The company says they began using the strategy to combat scalpers selling tickets on secondary markets which still costs fans more money while simultaneously cheating artists out of those profits.  

It may not be an ideal solution. However, the way the website saw it, it was a more reasonable way to arrive at a fair price and keep scalpers from both cheating fans out of tickets and artists out of their rightful profits.   

Due to the wide range of variables that a company can use and the near-infinite ways a business can choose to implement the strategy,

there are many types of dynamic pricing that can be found in a myriad of industries from live entertainment to merchandising and beyond.

Dynamic pricing in retail is one of the most common and the example that most people will have heard of or encountered in their own lives. As the technology improves and its capabilities expand, more and more businesses begin to see the value of dynamic pricing adoption.

In fact, it's so popular now and used in so many different ways that it's likely that your favorite brands are using it as well. If you want to see the ways that the companies you love are implementing the technology, try searching for "dynamic pricing example [company name]" and see what comes up.  

There are many different ways to implement dynamic pricing into your business. Many business software brands have solutions for using a dynamic pricing strategy. There are plenty of options available. The trick is finding the right one for you. While there are ways to incorporate a dynamic pricing model in Excel, it's best to use an eCommerce business solution made for this kind of method.

Many people may still be wondering, is dynamic pricing ethical?

Well, that depends entirely on how it's implemented. For example, it's one thing to increase prices in accordance with supply and demand fluctuations, but it's another thing entirely to sell products at vastly inflated prices during an emergency as many sellers did during the beginning of the pandemic.

There are a unique set of dynamic market advantages and disadvantages. Price gouging is one of the biggest disadvantages to such a technology. However, there are many benefits of flexible pricing as well. It makes it much easier for businesses to respond to rapidly changing conditions for example.   

Variable pricing advantages and disadvantages exist in general like in the examples above. These apply to the overall usage of the strategy. However, it's just as important, if not more so, to consider the dynamic pricing advantages and disadvantages for your business specifically. Every industry will be different, so it's good to do some research and learn how it applies to yours.

What are the disadvantages of dynamic pricing in your industry? Does the tactic map well onto products and factors in your niche? Find out as much as you can before making any decisions and keep the best way to serve your customers in mind. 

In many use cases for dynamic pricing, machine learning is the way the automated, dynamic nature of the model is supported.

Many dynamic pricing projects have been undertaken by major players in the business software space. You're likely to find this capability alongside or within other pricing software like CPQ systems.

Many programming terms come up frequently in discussions about dynamic pricing, Python and GitHub being the most common. If you're not very technical and have no interest in the nuts-and-bolts side of how the technology actually works, then don't worry about it.

It isn't necessary to comprehend the coding side in order to understand the utility of the software. However, if that is something you're interested in, you can find dynamic pricing algorithm examples on GitHub and learn more about how it works with a simple Google search.

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