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.

Lately, product configuration options and CPQ software have been a major talking point.

More people are encountering product configurators in their daily lives, seeing just how useful they can be, and considering adding one to their business. Naturally, they often discuss this with other business owners and they're noticing a common thread.

Every time someone discusses product configuration software, dynamic pricing always seems to be mentioned. So, retailers are wondering, why dynamic pricing? Out of all the features the software has and the many benefits it provides, why do so many people keep going on and on about the advantages of dynamic pricing specifically? 

No matter who they ask, dynamic pricing is likely to come up in the conversation. So, why are people so excited about this feature? The answer is simple: Convenience. Anyone who sells a product that can have different pricing depending on the options chosen knows the headache that is custom product quoting.  

Creating a quote is time-consuming, requires having pricing information on hand, determining the cost changes for every option, adding any applicable discounts, and math. Everyone hates math. The quote often needs to be checked for accuracy by others, requiring even more time and a lot of back and forth. It's a hassle that dynamic pricing solves.

On top of that, dynamic pricing allows customers to shop without a sales rep thanks to guided selling. Imagine if every customer buying a plane ticket or aspirin needed a sales rep to add up their costs, apply loyalty points, and calculate the discount to find a total. Luckily, dynamic pricing in airlines and pharmacies takes care of that.

It works using a more complex version of a pricing model Excel template and a dynamic pricing algorithm. Let's dive into some detail and answer some questions like what is dynamic pricing in eCommerce or retail and what are the benefits of using it.

Examples are a great way to gain a better understanding.

Especially when it comes to complex and abstract topics like business software. Dynamic pricing examples can display how the software functions to allow product configuration and customization. Plus, they demonstrate how ubiquitous CPQ systems have become. Top examples to showcase these things include fast food chains, business cards, and furniture.

Fast food chain apps and ordering kiosks allow users to build their ideal meals. That's a perfect example of product configuration using existing items and features. You can also customize the individual items with your choice of toppings. The system automatically determines your price without a cashier.

Furniture is a good demonstration of how complex configurations with many options can be created and customized. Think of designing a sectional with a specific amount of regular seats, recliners, and armrests, then customizing it with cup holders and other accessories. Conversely, business cards require entirely custom features like your logo, business name, and address.

Despite seeming more custom, the pricing of business cards is often simpler than that of furniture. Dynamic pricing for Uber can be a great example of how the system works with unique pricing structures and makes an ideal international pricing example to highlight the benefits of dynamic pricing in those circumstances.  

As with any software, dynamic pricing pros and cons exist which will weigh differently for each business.

While there are both dynamic pricing advantages and disadvantages, most users believe that there are far more advantages and that the few drawbacks there are don't come close to outweighing them.

For example, dynamic pricing tools can take some time and effort to set up correctly. You may even need to enlist the help of an expert to get it right. However, once the system is fully operational, it takes much less to maintain it than it did to set it up in the first place.

Plus, the benefits of flexible pricing to your business, especially in the long run, more than outweigh the temporary inconvenience of setting aside the time and resources needed to make those flexible pricing advantages available to you. Marketplace dynamic pricing is so popular due to the results it provides for businesses using it.

Marketplace dynamic pricing tools allow businesses to run much more efficiently, increase sales, cut costs, and improve customer experience by offering omnichannel shopping via guided selling. This allows customers to get exactly what they want, operate independently as they prefer, and face vastly fewer obstacles with a completely streamlined purchase process.

Dynamic pricing examples in retail are unavoidable.

Everything from ordering fast food and requesting an Uber to shopping for various products for our homes and businesses can involve configuration software using dynamic pricing. These widespread examples and use cases make people wonder why dynamic pricing in retail spread so rapidly. Again, it all comes down to the many enormous dynamic pricing benefits available to businesses using it.

Even for corporate giants like Amazon, dynamic pricing has plenty to offer. It doesn't just strengthen businesses by adding benefits either. It can also eliminate many weaknesses already present. Current methods also have pros and cons. That's why updating to purpose-built technology specifically created to increase efficiency and reduce many pre-existing obstacles is often the best option.

Customer support expenses are one of the many challenges inherent to running a business. Guided selling and dynamic pricing minimize call volumes, thereby lowering support costs. Other problems helped by dynamic pricing include cart abandonment, system maintenance, and product photography costs. That doesn't even take into account the advantages of dynamic pricing in retail using machine learning. That's when the benefits really explode.

While dynamic pricing software can be found in brick-and-mortar retail, that's not what most people think of first when discussing it.

Dynamic pricing in eCommerce is much more prevalent and beneficial. Due to the wide array of features designed for eCommerce businesses and uses tailored to online environments, that's where the technology really shines.  

Implementing this software will have the same features and benefits no matter who is using it. A small start-up business can get the same advantages that dynamic pricing for Amazon provides. The scale is much larger for businesses of that size, however, the things that CPQ software allows you to do and the value that the technology can provide remain the same.

When looking at a dynamic pricing eCommerce case study library, businesses of every possible size and industry are often represented. No matter how big or small, it's always clear that adding guided selling with dynamic pricing capabilities cuts down on their workload, lowers their business costs, saves a ton of time, increases sales and profits, and streamlines the business's workflows as well as the customers' shopping experience. It can even help sellers expand much faster.

As mentioned earlier, to expand the utility of dynamic pricing machine learning can be implemented. 

Dynamic pricing AI can do things considered impossible for humans. Almost any dynamic pricing algorithm example demonstrates just how little they can truly account for as traditional dynamic pricing algorithms can usually only factor in a few different variables.

However, the number of variables that exist—both inside the business itself and throughout the overall market as a whole—are extremely extensive and complex. These can include internal things like your personal sales goals, product pricing, inventory, audience size and demographics, and average sales.  

External factors are much more widespread and difficult to account for like competitor data, current time, date, upcoming holidays and events, location, weather, and overall market trends. No human could evaluate all these factors, identify patterns, implement an optimization strategy, create a predictive model, and forecast the results accurately.  

By implementing AI software that uses code to power your dynamic pricing with machine learning in Python or another coding language, you can create a system that accounts for all that and more. The more you use it, the more it learns from past outcomes and data sets. If this doesn't put the question of why dynamic pricing is so popular to rest, then nothing will.

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