Dynamic pricing involves continually adjusting prices based on real-time supply and demand, competition, and other external factors. This strategy is commonly used in industries like travel, hospitality, and e-commerce.

By using advanced analytics and AI, marketers can monitor market conditions and adjust prices dynamically. For example, airline companies frequently change ticket prices based on demand, booking time, and competitor pricing.

Example: Take AirAsia, Malaysia’s budget airline, as an example. AirAsia uses dynamic pricing for flight tickets. Prices fluctuate based on factors such as booking time, demand, seasonality, and competitor pricing. For instance, tickets are cheaper during off-peak periods and more expensive during holidays or peak travel times.

Understanding dynamic pricing helps you respond quickly to market changes, optimize revenue, and stay competitive.