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Dynamic Pricing Demystified: How Price Optimization Works In Tandem With Marketing


We're finding ourselves fielding the same questions about how Price Optimization works with various marketing efforts so we’ve compiled our responses into a resource that can be referenced and shared. It is our hope that this will make it easy for our customers to continue to champion our solution, as well as help empower marketing professionals to join the ranks of Price Optimization aficionados (we’re making shirts).

In this blog, we will explore how Price Optimization works in tandem with specific marketing activities. Whether you're a business exploring dynamic pricing or a current Spresso customer, this guide provides best practices for how to integrate Price Optimization into marketing efforts.

Note: we’re jumping right into the details here, so if you need a refresher on Price Optimization and how it works you can read our blog about it here!

Price Optimization and Product Feeds

Shopping ads, like those on Google, Amazon, Instagram and more are a core tenant of many brands’ marketing strategies and often critical to customer acquisition. It’s understandable that marketing gets nervous when the topic of dynamic pricing is broached - we can’t afford to get dinged!

You can tell those PPC pros to rest easy, Price Optimization was built by retailers and used in our own $200M ecommerce business (in which shopping ads were an essential part of the marketing strategy). With Price Optimization, you have the option to show the price in your product feeds to consumers originating from this channel and remove this traffic from the price testing. In addition (or in place of), Spresso has advanced bot or crawler detection capabilities and will show the expected default price to these bots to ensure there will be no flagging for price discrepancies, allowing for greater optimization opportunities.

Price Optimization and Owned & Operated

How does Price Optimization work in conjunction with email, social, website, SMS, and other owned and operated channels? Seamlessly is the answer!

Starting with web, the optimized price will appear all places a product’s price occurs including standard product pages and the cart, additionally, it will appear across any category pages or aggregate pages. The optimized price will also reflect promotions - if you’re advertising 15% off, this discount will apply to the optimized price.

If your marketing strategy determines that you advertise a specific price, you can configure your campaigns to pause during the promotional period or conclude before the promotional period begins. This would enable you to send an email advertising a specific price.

Of our customers that advertise specific price points (as opposed to percentages), we frequently hear that they first add new products to Price Optimization to determine the optimal price point. Then, at the conclusion of this campaign, they will run a marketing blitz promoting the specific, optimized, price point. Following the marketing promotion they will add the products to a sell-through campaign.

Another common use case our customers use Price Optimization for is to reduce discounts and/or are trying to limit promotions. In either scenario dynamic pricing is an excellent strategy. Untraining your customers to wait for a promotion to purchase can be an uphill battle, and one that Price Optimization can greatly assist in. Price Optimization uses your first-party data to feed the model so you’re able to test different price points and hone in on the optimal price to match your margin and sell through goals quickly vs. having too much inventory and needing to discount later.

Price Optimization and Influencer & Ambassador Marketing

Influencer and ambassador marketing have become powerful tools for driving brand awareness and increasing sales. But how does Price Optimization work with these campaigns? Firstly, does your influencer specify your product price in their promotion? If so, Spresso can use the affiliate link tag in their promotion to ensure all traffic coming from the influencer sees the promoted price.

Another way to ensure dynamic pricing does not interfere with influencer strategy is by tweaking the influencer briefs to have influencers refer to promotions using percentages and refrain from specific price points. Since influencers are often given specific codes to promote it is a natural and organic message. Of course, you can also have your influencers promote products that are not actively being optimized.

Lastly, the solution hones in on the optimal price quickly and then direct the majority of your site traffic to this price. This means the likelihood that the influencer will see a different price than the majority of your traffic is low.

In the edge case that an influencer, or more likely an ambassador, happens to promote a price  that’s different from what a consumer would see, you can simply honor the lowest price.

Price Optimization: A Holistic Approach

To fully embrace the power of dynamic pricing, it's essential to take a holistic approach that encompasses all your marketing activities. By leveraging retail pricing software, like Price Optimization, you can seamlessly integrate dynamic pricing into every aspect of your business strategy - from shopping ads to owned channels to influencer marketing.

In conclusion, implementing Price Optimization in conjunction with various marketing activities can significantly impact your business' success. Retail pricing software, like that created by Spresso.AI, empowers you to make data-driven decisions, driving profitability, conversion or both.