Dynamic Pricing is evolving rapidly thanks to the advancements in technology, particularly artificial intelligence (AI) and machine learning (ML).
For SMEs, understanding and leveraging these innovations is useful to improve their competitiveness and optimise their business operations.
Dynamic Pricing: Machine Learning and AI Innovations
As the Harvard Business Review puts it,
“Dynamic pricing is a strategy that bases products or services’ prices
on evolving market trends, such as
Inventory levels, Supply and demand,Competitor pricing”
Dynamic pricing has been around for a while.
In fact, aviation, finance (i.e. Insurance Companies) and large e-commerce platforms (read: Amazon) used it.
Nevertheless, AI and Commercial Predictive Analytics (PA) software are offering new levels of affordable sophistication.
What does this mean for SMEs?
- Personalised Pricing: AI algorithms can segment customers based on their behaviour, enabling businesses to reprice the same product. For example, loyal customers might receive exclusive discounts, while competitive offers would reach price-sensitive shoppers.
- Demand Forecasting: ML models can predict future demand with remarkable accuracy, allowing SMEs to adjust prices proactively rather than reactively.
- Competitor Analysis: AI tools can monitor competitors’ pricing strategies in real time, ensuring SMEs remain competitive.
We have worked with several SMEs that developed their dynamic pricing algorithm and their monitoring tools. Nevertheless it is costly, this option opens the doors to multiple micro-risks.
With as little as $80 per month (or a little over £65), SMEs can alter their prices based on their customers and adapt their content based on the location of their users.
We do not advocate for any specific software, but we recognise that ML and AI can dynamically monitor and personalise pricing.
Companies can achieve this quickly without needing additional resources by focusing on upskilling the current workforce.
Additionally, available solutions seamlessly integrate dynamic pricing features with existing e-commerce platforms (and any custom platforms), making it easier for SMEs to implement these strategies without burdening their Marketing and Sales departments.
Future Outlook: 2026 and Beyond
As we look ahead to 2026 and 2027, AI and ML will profoundly influence dynamic pricing.
However, SMEs should prepare for several key developments.
AI will enable even more granular customer segmentation, allowing businesses to offer micro-targeted pricing based on individual preferences and behaviors.
Advanced ML models will not only forecast demand but also predict market shifts, helping SMEs stay ahead of trends. Blockchain technology will enhance transparency in dynamic pricing,
Additionally, as voice-activated shopping and Internet of Things (IoT) devices become more prevalent, dynamic pricing models will adapt to these new channels, offering real-time adjustments based on user interactions.
To stay ahead in this evolving landscape, SMEs should invest in AI-powered dynamic pricing solutions that align with their business size and industry.
Ensuring data accuracy and comprehensiveness is crucial, as AI and ML rely heavily on high-quality inputs.
Transparency in pricing strategies is essential to build and maintain customer loyalty.
Finally, SMEs should continuously monitor and adapt their pricing strategies to keep pace with technological advancements and market changes.
As the e-commerce landscape continues to evolve, SMES must adopt dynamic pricing strategies powered by AI and machine learning to remain competitive.
However, navigating the complexities of pricing optimisation, customer segmentation, and real-time market insights can be daunting, particularly without the requisite expertise or tools.
Don’t know where to begin? Our recently published E-Commerce Report offers actionable insights into the latest trends, technologies, and best practices shaping the future of dynamic pricing.
Whether you aim to implement AI-driven pricing models, build customer loyalty programmes, or optimise geographic pricing, our team of experts is here to guide you every step of the way.
