Dynamic Pricing

The approach comes from airlines and hotels, where capacity is fixed and cannot be stored, and spread to e‑commerce, where a price change costs nothing to execute. In a physical store every change has to reach the shelf. With paper labels it means store labor and a risk that the shelf and the till show different prices; electronic shelf labels (ESL) remove the execution cost, not the question of how shoppers read prices that keep moving. Dynamic pricing rules typically combine three inputs:

• Demand signal – sales rate against the forecast for the hour, day or week
• Stock position – units left against the remaining selling time or shelf life
• Competitor price – position against a reference competitor within a set price corridor

Dynamic pricing in practice

In the EU, dynamic pricing runs into the rule on announced price reductions. Under the Omnibus Directive (EU) 2019/2161, transposed into national law including Czech and Slovak consumer protection law, an announced discount must state as the prior price the lowest price applied during at least the 30 days before the reduction. A regular price that moves up and down therefore sets the reference for the next leaflet. If an item sells at 100, dips to 89 for a few days three weeks before a leaflet and returns to 100, the leaflet price of 79 can be advertised as 11% off 89, not 21% off 100. Member states may set exceptions, for example for goods that perish quickly, so the exact rule has to be checked per market. Where an item is both priced dynamically and promoted in leaflets, the two calendars have to be planned together, or regular price moves will quietly shrink the advertised discounts.

The approach pays off where the value of a unit falls with time: fresh food close to its expiry date, seasonal stock near the end of the season. On key value items (KVIs), the products shoppers use to judge a store's price level, frequent changes work against the price position the retailer is trying to hold, and on items with stable demand they add label changes without adding profit. Where price drops follow a predictable pattern, shoppers learn to wait for them. The cost shows up as weaker sales at the regular price, and an elasticity model that only reads the response to the current price does not see it.

Veritico PRICE covers price management, price optimization and markdown optimization and runs on the pricing engine of Logio's partner Yieldigo. For fresh food, Veritico STOCK manages items by shelf life to reduce write‑offs and discounted sell‑offs. See the PRICE module, price management and expiry management.

Related terms

• Price Optimization
• Markdown Optimization
• Price Elasticity of Demand
• Promotion Planning