Pricing Should Bend, Not Break

How flexible is your company’s pricing strategy?

This question – and how you answer it – has never been more relevant. 

Today’s business climate is still adjusting to generational changes as a result of the COVID-19 pandemic, global supply chain breakdowns and continued increase in customer entitlement by way of more choice-friendly digital-first financial management solutions.

In other words, a lot of stuff has happened in recent years requiring a certain nimbleness to manage cost fluctuations, product shortages, long delays and shifting margins.


To help navigate these chop-inducing circumstances, more companies are turning to dynamic pricing strategies. This process fosters flexible prices for goods or services based on real-time demand. The strategy allows companies to factor in considerations such as supply and demand changes, competitor pricing and other market conditions in order to better price set.

While dynamic pricing might not be the end-all, be-all for every business or industry, some for which this has proven to work well include:

  • Hospitality
  • Travel
  • Entertainment
  • E-commerce
  • Retail
  • Electricity
  • Public Transportation

Put together with the right business model, dynamic pricing can certainly be a good strategy to boost company revenue. And, in uncertain markets as we find ourselves in these days, more fine-tuned pricing can help organizations stabilize, adjust to demand and guard margins when needed.

As KPMG noted in a recent paper building upon such strategies, applying necessary pricing changes could not only help a company ride out current volatility, but establish “organizational changes that will pay dividends for years to come, in good times and bad.”

Next Level Pricing

Titled, “Pricing in an era of turbulent supply chain headwinds,” the paper discusses an approach tabbed by KPMG as SADP, or supply-aware dynamic pricing, in which companies can adapt to shifting supply chain realities by adjusting the price down to every SKU on a monthly, weekly or, if needed, daily basis. 

While KPMG notes the wide use of multiple forms of dynamic pricing today, including hourly rideshare price shifts and midweek airline and hotel price adjustments, their SADP framework goes a bit further. The goal is to apply factors including product hierarchies, customer segmentation, competitor moves and more in order to optimize pricing choices and account for likely supply disruptions.

“Across industries and around the world, we have found that companies can improve their pricing maturity with new tools and capabilities, along with organizational and mindset changes,” the KPMG paper, authored by a trio of Advisory principals, noted on next steps. Highlighting the need for cross-functional teamwork to achieve such pricing maturity, KPMG states, “this requires connected workflows, integrated business planning and the right enterprise-level technology.”

Sometimes, though, a little baby-stepping is required in order to get the right framework in place.

Do the Four Step

When it comes to getting the most out of a pricing strategy, dynamic or otherwise, consider the following four steps:

  1. Define your company goals – establish the big picture statements such as the existence of your business, what it stands for and what your customer can expect from you before pricing products or services
  2. Establish your pricing strategy – consider the overall strategy your organization plans to apply in order to attract and retain customers before diving into dynamic pricing tactics.
  3. Choose and implement your pricing strategy – once the agreed-upon strategy is established, it’s time to apply tactics in order to breathe life into it. Strategies including price discrimination, price skimming, yield management, etc., either individually or in some combination, may make sense, depending on earlier established company goals. 
  4. Test your pricing strategies – Systems must be put in place to monitor sales in order to, first, measure, and then improve, where needed. If the results are not what you seek, a re-evaluation is in order.

Truthfully, there is no catch-all answer to how implementing a specific pricing strategy will ultimately impact a business. Often, it can come down to confident decision-making along with proper evaluation of benefits and risks, goals and gains.

So, again, how flexible is your company’s pricing strategy?

Contact us today to learn more about how RecVue was able to deliver attribute-based pricing for a variety of services for Airport Terminal Services (ATS) and the importance RecVue’s monetization platform places on flexibility in handling a variety of pricing models. 



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