Glossary

Dynamic Pricing

In one line: Dynamic pricing adjusts product prices in near real-time based on demand, competitor moves, inventory levels, and other signals.

Not just “sales when stock is low”

The simplest version is a markdown rule (“drop price 15% if inventory still holds 30 days from end of season”). The AI version is far richer: it watches competitor pricing, demand elasticity for each product, your margin position, and inventory pressure — and recommends repricing windows that protect margin and maximize sell-through.

Where it works well

• Electronics — commoditized products with visible competitor pricing
• Fashion — seasonal markdown cycles, end-of-season clearance
• F&B delivery — daypart-based pricing, surge offers
• Perishables — price-to-clear before waste

Where to be careful

Customers notice when prices change between visits and they don’t love it. The retailers who use dynamic pricing well are transparent about it, change gradually (not minute by minute), and avoid using personal data to charge different shoppers different prices for the same product — which is legally risky and trust-destroying.

Related terms

Demand Forecasting, Inventory Optimization, Personalization