Dynamic Pricing: Strategies, Examples, and Applications

Recently, we’ve all seen concrete applications of dynamic pricing in different markets. Prices of everyday goods, such as toilet paper and hand sanitisers increased dramatically based on demand. Among other common examples of dynamic pricing, we can find happy hours at a local bar, airline pricing based on seasonality, and ride-hail surge pricing.

In this post, we’re going to identify different types of dynamic pricing strategies as well as help you establish if it’s an efficient pricing model for your business. 

What is Dynamic Pricing?

In simple terms, the dynamic pricing model can be looked at as a way of selling the same product at different prices to different groups of people. This pricing strategy enables businesses to set flexible prices depending on current market demands. In this model, prices continuously fluctuate, in a matter of minutes, hours, or days, based on the market in which a business operates.

Dynamic pricing, also called real-time pricing, surge pricing or time-based pricing incorporates many technologies to obtain a spontaneous range of prices. It allows businesses to modify prices based on algorithms and machine learning, considering competitor pricing. It’s not designed to work for every business or industry but among those that feel its positive impact, we can find: hospitality; travel; entertainment; e-commerce businesses; retail; electricity, and public transportation. Usually, this pricing model is more efficient among wealthier consumers since they have enough resources to cope with price variations. Consumers with more limited funds or other spending priorities might wait for lower prices or sales to purchase a product or service. 

Types of Dynamic Pricing strategies

This pricing strategy can be applied in different forms. Each of them may be employed to reach different goals. These are some dynamic pricing models adopted by market leaders:

  • Segmented pricing – This strategy is characterized by different prices for identical products, with the exact same production and distribution costs. It’s targeted for customers in different geographical areas, as the name ‘segmented’ suggests. The pricing differs based on a customer’s current location and it’s considered as a wise strategy to attract niche customers who place more value towards a service or product than others. It is used to increase revenue in areas where people are less sensitive to price fluctuations.
  • Time-based pricing – This dynamic pricing strategy is directly related to the age of a product or its entry in the market. Therefore, by applying discounts and by reducing the price of older products, businesses can experience an increase in its sale. When new collections are introduced in the market, the prices of older ones can be lowered to get rid of that stock surplus.
  • Peak pricing – Peak hours/seasons = high demand. This pricing is directly related to market demand. With time, a business will find that a product or service sells much faster based on seasonality or rush hours. Most of the time, this translates into limited choices for consumers with a lack of competitors providing similar products or services. A practical example would be the cost of hotel rooms during peak seasons vs. the cost of a hotel room during off-seasons.
  • Random fluctuations in market conditions – As we currently live in uncertain times, there is no better example of how vulnerable a given market can be. Therefore, if for any reason sales start to fall, companies should begin to lower their prices until things get back to normal.
  • Penetration pricing – This pricing is designed for newer products with initial lower prices compared to the market price. It’s applied when businesses want to reach a large portion of the market for customers to get familiar with their list of offerings. Prices are increased gradually as demand in the market increases.

Is Dynamic Pricing a good model for your business?

There are some techniques that particular businesses can apply to make this pricing strategy work. First, transparency plays a key role. Customers must always be aware of the factors on which the price depends. You want to avoid situations where customers have no clue why they bought the same product for different prices. Another way to implement dynamic pricing would be through motivating your customer’s behavior. If your business is based on seasonality, it’s a given that last-minute purchases will cost the end user a lot more compared to bookings made well in advance. Let’s go over some industries where this pricing model proves to be extremely efficient.

–          Events

While it’s still an under-utilised tool, if used accordingly, dynamic pricing can help event organizers generate more revenue and increase urgency. Based on the strategies mentioned above, event organizers should implement dynamic pricing by using time-based pricing and demand-based pricing. While ticketing generates an important portion of revenue, changing ticket prices based on demand and point in time is key. Therefore, it is not enough to simply increase the price of a ticket every 15 days if you don’t actually sell at least a pre-defined amount. Instead, prices should increase every 15 days and every time another 100 tickets have been sold. If only 50 tickets are sold within 15 days, it means that increasing the price is not relevant.

In the same event setting, food & beverage vendors should also use dynamic pricing. Think of a music festival that goes on for three days 24/7. There will be times when the number of participants will be relatively low. Therefore, lowering prices during those hours will increase sales and profits. It’s better to get rid of your stock and still make a profit rather than throwing it away.

–          Ride-hailing services

Uber, the world’s leading ride-hailing operator has implemented a dynamic pricing model since day 1. It controls the prices that customers pay based on demand. Whether it’s a public holiday, a snowy or rainy day, or some sort of public transport strike, the cost of fares and waiting time begin to increase. It’s what they call ‘surge pricing’.

  1.  The first reason for its application is to increase the supply of drives in a given area by increasing the amount they get paid.
  2. The second reason is to reduce demand and waiting times for a ride. Customers that are not willing to pay a higher fee during busy hours will most likely try to find another alternative or wait for prices to get back to normal.

 Their ‘surge’ pricing model uses Machine Learning to estimate market conditions based on multiple factors. Real-time data, such as traffic and weather conditions are essential for accurate forecasts.  

Wrapping it up

If not used properly, dynamic pricing can cause serious problems. However, its potential opportunities for both businesses and customers should not be overlooked. It can maximize profits by employing price optimisation while making sure that goods and services are sold at the ideal price. If you run a business where supply and demand influence your product considerably, dynamic pricing is most likely the most efficient strategy to ensure a steady flow of sales.

By using Oveit Pay, economy owners can onboard external vendors and create an internal payment system (closed-loop). How is this related to dynamic pricing? Well, transactions within this internal economy are updated in real-time. The available reports enable vendors to change prices strategically, based on demand and type of products sold. As a vendor, one has access to quantity and type of products sold and the exact time when that product was purchased. The system then customizes the menu and displays relevant products with price recommendations based on demand and available stock.

July 10, 2020 Economy as a Service, Events, Technology, Uncategorized No comments yet

How to make event venues safe with Cashless Payments?

There is no doubt that the world of events and hospitality has been seriously hit by COVID-19 and the imposed lockdowns. Major festivals around the globe got postponed or canceled. Across Europe and not only, governments begin to realize that imposed restrictions are indeed an efficient way to limit the spread of the virus, but they also realize that such restrictions can only harm economies in the long term. So, should event organizers implement cashless payments as a precautionary measure to limit the spread of the virus?

As economies get back and running after weeks of lockdown, many of us face unprecedented situations in terms of conducting business and daily activities. Even before this pandemic, it was obvious that the use of cashless payments solutions around the world is on the rise. But guess what? In a post-COVID-19 world, cashless payments might be more important than ever.

It is predicted that a new type of customer will emerge from this pandemic. We already saw an increase in demand for cashless payments solutions over the last years, but the differentiator lies in how providers deliver those expectations and how it separates them from other competitors.

Facts about COVID-19 and Cash handling

Government officials have strongly advised us to avoid cash handling during the coronavirus outbreak. It is well-known that cash is notoriously covered in germs, but what is the reality when it comes to COVID-19 and cash? According to many experts, the chances of being infected after handling cash is still low compared to other ways of spreading the infection. According to a recent post published by Reuters, the U.S. Federal Reserve started quarantining physical dollars coming from Asia, before allowing it to recirculate in the U.S. market. It was treated as a precautionary measure against spreading the virus among U.S. citizens. Although there is no hard evidence saying that handling cash increases the risk of infection, many retailers decided to advise their clients to use cashless alternatives.

At Oveit, we’ve decided to upgrade our closed-loop payment solution and add two additional features, very relevant in the given context. These two are related to real-time footfall tracking capabilities and an App which enables attendees to act as their own cashiers.

End user App (Wallet) for Cashless Payments

Without an end-user App, attendees would still have to visit a physical top-up point to add money to their digital wallets. After many years of experience and feedback coming from our partners, we concluded that building an end-user App (wallet) can bring more value in return, for both event organizers and participants. The purpose of this App is to create a seamless top up process for the end-user (attendees), allowing them to use their own smartphones for comfort and security purposes.

For the event organizer, this alternative decreases the number of cashiers required on-site and therefore reduces the event costs. Attendees are empowered to act as their own cashiers with the entire process being automated. Moreover, by activating the ‘Auto top-up’ feature, participants can assure that their digital balance will never fall under a pre-defined amount.

Also, the withdrawal process is simplified. Traditionally, the process required attendees to visit physical top-up points and receive cash in exchange. The top-up was done by either card or cash payment, but the only option to withdraw the remaining amount was by receiving cash back. The end-user App (wallet) removes this step and enables participants to withdraw the remaining balance on their own or even use it at another event. 

Footfall Tracking

Recently, we’ve received a request from one of our clients. He wanted to know if it’s possible to track in real time the number of attendees in specific areas of the venue. 

With the current social distancing rules in place, we believe that being able to track footfall in real-time can contribute to a safe and responsible event. This way, you can benefit from a modern alternative to control the number of attendees inside a venue. How does it work?

1.       Attendees arrive at the event with their electronic tickets ready to be scanned

2.       A designated staff member hands in NFC wristbands/cards/badges for every participant

3.       By using the Oveit Pay App on an Android device, a staff member simply scans the QR code on the ticket and pairs it with a wristband/card/badge

4.       Before passing the entry point, participants are required to tap their NFC tags on an NFC enabled reader

5.       The same process applies for check out. Participants tap their NFC tags on NFC enabled readers placed at all exit points

Final Thoughts

Among event professionals, we’ve seen continuous debates on whether the event industry will change in the future and how it will change. As retailers get back and running, B2C and B2B interactions look different, with several precautionary measures in place. It’s the aftermath of a global pandemic and it’s our responsibility to act accordingly.

As we are eager to see events coming back to normal, we strongly believe that Oveit can contribute to a safe and responsible way of hosting large gatherings. Of course, other parties must get involved to achieve that, but in terms of safe payment practices and access control, we got you covered!

June 17, 2020 Access management, Economy as a Service, Event management, Event professionals, Event tech, Festivals, Oveit Features, Technology, Uncategorized No comments yet

Organizing events with millennials in mind

Millennials or Generation Y as others like to call them, were born between 1982 and 2000. In the US, millennials represent half of the people in employment and are the largest generation in the country’s workforce. At a global level, this exclusive club of 1.8bn people account for roughly a quarter of the world’s population.

According to a recent study, this generation cares more about experiences and is less materialistic in nature. The event industry is all about delivering memorable experiences and organizers must get creative to retain millennials for future editions.

Entertain millennials through technology

Millennials are tech-savvy and expect to attend events that embrace technology. Begin with the simple things that make a big difference, such as registration. The registration process should be mobile friendly and paperless. In 2018, 58% of online traffic came from mobile devices, while 42% from desktop. Generation Y has a big contribution to these numbers, with mobile devices being the preferred way for web surfing. Forget about physical tickets and send them electronically.

Instead of printing out brochures with event related information, include those details into a branded mobile app. The App can keep your audience entertained and up to date with event related news. It can be used as a networking tool as well. Face to face interactions are still a priority for this generation, despite their online presence. Allow them to match other attendees with similar interests and aspirations by using a dedicated event App.

Content quality

The average attention span is down from 12 seconds to 8 seconds according to a recent study. This is how long it takes for your audience to lose interest during a boring presentation. For organizers that focus on designing events with millennials in mind, providing entertaining content is essential. To achieve that, you can set up a pre-event discussion with the help of social media. This way, you enable your attendees to express their views and expectations. Based on their preferences, reach out to experienced speakers that deliver content in a professional and interactive manner.

Make it sustainable

Classifying as the first generation to grow in a world where climate change finds itself in a continuous debate, millennials tend to be very concerned when it comes to environmental sustainability. They admire progressive companies that take action and contribute to a better world. Your event makes no difference and should approach a sustainable culture to become a success.

Oveit is a tool that allows organizers to design events with millennials in mind. It offers a fast & secure payment alternative, a friendly registration process and on-site entertainment with a simple tap of the hand. If you want to convince yourself and give it a try, feel free to drop us a line!

March 9, 2020 Event management, Event professionals, Events, Uncategorized No comments yet
young lady near a yellow wall and influencer marketing text

Use influencer marketing to promote your events

Internet access expanded our communication possibilities in ways that we have not imagined. It also changed the way we live, shop or work. The rise of social media platforms redesigned our daily behavior: daily, we spend almost 2 hours navigating social media platforms. Naturally, social media became the “place to be” for every business that wants to stay close to its (potential) customers. Marketing possibilities are countless and it’s easier than ever to reach customers, regardless of their current location. A large followers base can be the difference between failure and success.

But creating large followers base may take time and time is our most important and most limited resource. So, in order to gain access to already existing ones, brands use what is known as “influencer marketing”What is influencer marketing?

Wikipedia informs us that “Influencer marketing (also influence marketing) is a form of marketing in which focus is placed on influential people rather than the target market as a whole. It identifies the individuals that have influence over potential buyers, and orients marketing activities around these influencers.” Meaning a brand uses an influencer’s already created followers base to promote their services/products. This marketing method is not new, brands have always used influencers to promote their products. Known as “Celebrity endorsement”, it was used in the last 250 years. By the power of association, people transfer their feelings from the celebrity to the product, thus increasing the chances of purchasing it. There are more reasons “celebrity endorsement” works, an extremely useful study can be found here. 

But the rise of social media platforms created a new category of “celebrities”, known as micro-influencers. Micro-influencers are normal people that, in time, build large lists of followers. Unlike macro influencers (celebrities), micro-influencer have a tighter connection with their followers, and their social post generates a higher rate of engagement. This makes them the perfect choice for brands that want to promote their services, products or events.

 

Why should I use influencer marketing to promote my event?

Because every dollar invested in influencer marketings brings on average 6.85$, states a study conducted by Burst Media in 2014. Why can we expect such a great ROI? One of the reasons is that influencer marketing is closer to mouth to mouth marketing than it is to traditional marketing, so people trust it more. Users follow an influencer because they like and trust him/her, so they will transfer some of those feelings to the product/service. The same principle applies to events, people will want to attend an event where the influencer they follow is present.

Another reason for which influencer marketing had a phenomenal increase is the ineffectiveness of traditional online advertising. The number of pop-ups and banners became annoying, so people started installing ad blockers. And over 30% of internet users have them installed. More than that, we also developed our own “natural ad blocker”, known as banner blindness: when navigating online we tend to ignore all the design elements that resemble ads and our eyes avoid the areas where banners are traditionally placed. And it seems to affect 80% of internet users.

What should I know before starting an influencer marketing campaign for my event(s)?

 

  • Define your audience: In marketing knowing your audience is the key to success. And Influencer marketing makes no exception. So start by identifying the specific characteristic of your “ideal” attendee. Are you planning a street running event? Then probably your attendees are sports enthusiasts. A conference where #AI is the main theme? Surely developers would be interested. For any type of event, there is a specific audience and you need to find yours.
  • Find the right influencer. After you have defined your audience you need to identify the influencer(s) that can grant you access to it. It’s much more important to work with someone that covers your niche than to work with someone that just has a greater number of followers. Using the above example, if you plan a street running event and a sports guru (influencer) will promote it using social media your event will become interesting for many of his followers. Another used tactic is to invite influencers to your events, just like brands do for their sponsored events. Their live videos will generate buzz around your event.
  • Trust is a must. Influencers have gathered a great number of followers because people like the content they create. It would be illogical to think that you can gain more from his/hers users with content generated by somebody else. So you must be prepared to give your new partner total control over the content used to promote your event. You won’t be able to do this if you don’t trust your associate. Otherwise, you won’t gain maximum out this partnership.
  • Measure the performance. Without measurement, marketing plans are just fancy projects that may (but probably not) worth the effort. Fortunately, modern technology offers the tools we need to measure our marketing results, tools that you should also use for your influencer marketing campaigns.  

Conclusion

Influencer marketing is the new rising star of marketing and every event planner can benefit from it. But remember that its power is the connection that exists between the influencer and the followers, and a connection should also exist between your brand and the influencer. Because otherwise your partnership it would just feel unnatural and this will compromise your whole campaign. Start with these 4 tips in mind when working with an influencer and your events will become more popular than ever.

December 21, 2017 Event management, event marketing, Event professionals, Events 1 comment

Dear event planners, Volunteers are part of your team

If volunteering can change the world than I think it’s safe to say that volunteers can change your event. My colleagues and I saw many events were volunteers’ contribution was so important that I don’t really know if those events could have been possible without their help. And this is perfectly normal – large events (especially festivals, exhibitions, and conferences) mean large crowds so any extra help is greatly cherished. There are many reasons for which people volunteer at events and there are many reasons for event planners to reach out to volunteers. But for this to work you, the event planner, should:

picture of 4 volunteers holding fists together

Find out where you need help

Before you contact volunteers you must know what you actually need them for, meaning you will need to evaluate your needs for personnel. Find out which departments would need some extra help: marketing and communications, sales, technic department etc. so you know who to look for. People like volunteering but they also like to know what they are volunteering for and it wouldn’t do you any good to look for someone to help with registration when you actually lack a sound technician.

 

Ask early

My biggest problem when growing up was that I always waited until the last minute when I wanted/needed something. And, as life taught me (the hard way, how else?!), things tend to get rough when time isn’t on your side.

Spread the news that you are looking for volunteers early on otherwise you can you can find yourself in the unpleasant situation of not having enough personnel on site.

 

Define your expectations 

If you don’t know where you’re going how will you know when you get to the destination? Things aren’t very different if we speak of a new task or project: if you don’t know what you want to achieve how will you know if you did a good job? Things are even more unclear for volunteers, so you will need to explain to them what should be the end result of their work. It’s easier to evaluate your work when you have some clear goals.

P.s. this doesn’t mean that you must micromanage your volunteers, don’t get me wrong

 

Don’t “save” obnoxious tasks for volunteers 

You and your team should act like leaders and don’t use volunteers for the jobs that nobody wants, instead offer them the chance to do something meaningful. This way you can count on their help for your next events (and will be able to add some experienced people to your team).

 

Form groups and offer training 

After everybody has chosen a role it’s time for you to host a training for the whole team.

I saw that, generally, things work great when you create mixed workgroups (volunteers + team members) and offer the same “training” for all. Encourage socialization between your team and volunteers because, after all, you are all in the same boat, so you need to act like one big team.

Before your event starts “walk” everybody through the whole process at least once, so they all get the big picture. Seeing how a rather tiny role in the process actually helps things move forward will make everyone more enthusiastic about their role in the event.

 

Praise volunteers for their hard work

“How you feel is often more important than what you earn”. We tend to value words of appreciation more than we value financial rewards, studies reveal. But if you think that words of appreciation are so used so often that they start to lose their value…think again.Genuine words of appreciation are rare and hard to forget, so are able to make you really known and appreciated within the community of volunteers.

 

…and don’t forget that VOLUNTEERS ARE PART OF YOUR TEAM.

October 13, 2017 Business events, Event management, Event professionals No comments yet