MakeMyTrip is an Indian tourism company founded in 2000. Headquartered in Gurugram, Haryana, the company offers online travel services including airline tickets, domestic and international holiday packages, hotel reservations, railways, and bus tickets. MakeMyTrip is India’s first and largest tourism company. MakeMyTrip has offices in New York, Singapore, Kuala Lumpur, Phuket, Bangkok, and Dubai.
What is Dynamic Pricing?
Dynamic pricing is the concept of selling the same product at different prices based on the changing dynamics of the current market demand. This is why it is also called real-time pricing, surge pricing, or time-based pricing.
The decision-making process behind the dynamic pricing model is quite impressive. Under the black box, machine-learning models are working for you to develop new algorithmic models based on the market demands and your competitors’ actions. This data-driven process allows companies to adjust the prices of their goods continuously within seconds.
Setting Dynamic Pricing
Creating a pricing strategy
In this step, we will determine your pricing strategy based on your commercial purpose. If our goal is to increase your visibility and control the market, you may want to set competitive prices on the most popular products. Then, once they have purchased, you can redirect your customers to less popular products.
Choosing pricing methods
We have already mentioned some of the methods at the beginning of this article. But there are several options.
The most common are:
Competitive-based pricing: you adjust your pricing based on competition.
Prices based on price: taking into account the customer‘s view of the product.
Cost and expense: production costs of product + margin you want.
You can select one of three models at a time. It depends on your intentions.
Use, explore, and monitor
In the final step, we have to do tests and validate our strategy. See if the rules work well. As it will be the default system, everything should work like a clock (Yes, you can stop whenever you want, but that is not the point).
After a while, monitor and evaluate your results to see if you are achieving your goals. So you can rebuild and replicate your strategy to get to a better place.
Advantages of Powerful Price Model
It can be used as a way to improve sales
Flexible prices are often thought of as a way for firms to increase their prices.
While this is true to some degree, the method can also be used to reduce the price. Reduced prices can sometimes trigger loose sales, allowing a company to meet its sales target for a day, a month, or even longer. Simple flash sales are one way to promote the use of fluctuating prices locally.
It can be used to increase profits
Stable and Powerful Values
Varying prices are a method that can be used to maximize profits when competitors sell goods or services at very high prices. If you know what consumers may want in advance, you can adjust your product prices based on their shopping habits.
It can create high demand levels
Because empty seats equal zero revenue, variable prices are often used at events.
Demand vs Price
If seats are still available on the day of the event, some customers may be able to obtain them at a reduced price. This helps you to improve your income while allowing you to spend whatever income you currently have. This process can be found on MakeMyTrip.
Provides more details on customer behavior
The required curve for each client makes it easy to calculate changing prices. This curve indicates the minimum and maximum amount the customer is willing to pay for a particular service. This swing is created using a variety of data points, including the device used for purchase. More information on customer behavior can be achieved with this additional data, making it more likely that the auction will eventually take place.