The pressure is on for Shopify merchants. Ad dollars are being stretched to their limits as brands push to drive traffic to their stores. With increased competition and shrinking margins on marketplaces like Amazon and Walmart, staying profitable is a complex balance for multichannel brands.
That’s where dynamic pricing can help. With the right pricing strategy, brands can automate adjustments based on their goals, even as those goals change.
In this article, we’ll explain how dynamic pricing tools help keep pricing not only profitable but agile, making it easier to respond to changes as they happen.
Find the price that optimizes both sales and margin. See Trellis’ Dynamic Pricing tool in action.
What Is Dynamic Pricing for Shopify Stores?
Dynamic Pricing optimizes product prices in real-time based on demand, customer behavior, competitor analysis, and more. It can be used to accelerate sales velocity, boost organic rankings, and increase profitability.
For example, with a dynamic pricing platform, Shopify merchants can set rules to automatically adjust prices based on competitor stockouts or price changes. Understanding how price changes affect demand helps you strike the right balance between margins and sales volume, especially when managing multiple products, brands, and/or channels.
Dynamic pricing has the power to grow your market share, increase conversion rates, and even double profits. For multichannel businesses, dynamic pricing tools can also integrate with your sales channels to bring data insights together to help you drive growth across the board.
Are your best sellers priced correctly? Try our Price Elasticity of Demand Calculator for free.
Benefits of Dynamic Pricing
Done right, dynamic pricing can help you double down on profitable growth. Here are a few of the benefits.
Reduce Costs with Automation
Manual price monitoring can take large amounts of time and resources. Frankly, you can’t spare either as you scale. Streamlining your pricing strategy can help you reduce overhead, freeing up resources and talent for what matters most: scaling and growth.
Maximize Profits
With rising Shopify operational costs, price optimization helps you capture every last cent of revenue. With automated dynamic pricing, your prices are continuously re-aligned with market demand and consumer behavior. This means you don’t miss out on opportunities to refine the best price for every SKU in your shop.
Keep Your Best Sellers in Stock
Dynamic pricing algorithms can include instant responses to common inventory management challenges—for example, stockouts. Stocking out of best sellers has huge costs, including revenue losses, customer churn, and damage to CLV and reputation. You can automate real-time price adjustments to raise prices when a specific product is in high demand so you don’t sell out.
Clear Overstock
Maintaining healthy stock levels without tying up resources in excess inventory is a balancing act as old as time for eCommerce sellers. Dynamic pricing can help you lower prices to clear out excess inventory while still keeping profitability as high as possible.
Stay Competitive With Real-Time Price Matching
Most retail executives agree, the price wars aren’t over. The coming years will turn up even more competition and, therefore, more pressure to navigate the latest AI-powered tech around competitive pricing. Dynamic pricing is table stakes to price match or strategically undercut competitors.
Developments around dynamic pricing will continue to be tricky, but used well, these tools have the power to improve profitability for brands while also positioning pricing as integral—not antithetical—to an excellent customer experience.
➡️ The bottom line is that dynamic pricing allows you to try different pricing strategies and analyze data. For Shopify, the key is incorporating insights from other sales channels like Amazon Marketing Cloud to understand which customers are more likely to deliver sales and margins over time.
"It's critically important to be able to get a view of what it’s costing me to get a shopper to engage with me... and how much are they spending with me at that category level,” explains Trellis Chief Product Officer Krishna Vemulapali. “These dimensions are critical to understanding the different choices and strategies you may want to run across different categories."
Trellis’s Shopify + Amazon Marketing Cloud integration gives you powerful cross-channel insights. See it in action.
How to Set Up Dynamic Pricing in Trellis
Figuring out the strategy behind dynamic pricing can be complex—but once you have an idea of how you want to optimize, the right tools make it easy to configure.
Here’s a sneak peek at how to use the dynamic pricing tool in Trellis:
1. Head to the Pricing Dashboard.
2. Create a filter to find the products you want to include in your dynamic pricing plan.
3. Use the Bulk Action feature to Create a New Pricing Plan.
4. Give your pricing plan a name.
5. Set the minimum and maximum prices for the products.
6. By default, the Pricing Strategy slider is set to a Balanced Strategy to maximize profit. You can move the slider to optimize for Clearance or Margin depending on your goals.
7. In the dropdown menu, you can also optimize for Best Seller Rank (Amazon) or Competitor Price Matching.
Note: If Profile my Prices is selected by default, that means Trellis will need to test various price changes over a three week window before delivering accurate pricing results.
8. Once you’ve configured your desired settings, click the Enroll button.
Choosing the Right Dynamic Pricing Tool for Shopify: 7 Key Factors
There are a range of apps for executing dynamic pricing on Shopify, but they’re not all designed for high-growth multichannel businesses. Some of the most popular tools that cater to multichannel brands include:
- Trellis
- Prisync
- Dynamic Pricing Automation
- Repricer
- Minderest
- Competera
- Dealavo
- Omnia
- Intelis AI
- PriceMole
- Intelligems
You'll be investing some time in learning how to use your Shopify dynamic pricing program and getting everything set up, so it’s important to choose a tool thoughtfully. Here are a few key factors to consider.
1. Scalability
If you’re only selling on Shopify at the moment, it might be tempting to choose a plug-and-play dynamic pricing app. However, this can end up costing you more time and resources down the road as you scale.
Plugins often boast quick setup but lack support for the growing complexities of your business. For multichannel brands, look for a tool that comes with integration support and gives you the option to consolidate your multichannel data in a central dashboard.
This foresight sets you up for seamless growth without tech limitations—or worse, having to buy and implement a different tool later.
2. Compatibility
Compatibility with key platforms is essential for streamlining your operations.
Your dynamic pricing tool should easily integrate with not only Shopify, but also any other platforms you anticipate selling on. This may include Amazon, Walmart, and/or niche marketplaces specific to your category.
3. Real-Time Updates
Pricing adjustments that are truly “real time” are the cornerstone of dynamic pricing. Make sure your tool automatically pushes updates across all channels, rather than requiring manual steps for each.
4. Customization
A versatile dynamic pricing platform lets you customize your automation to optimize pricing adjustments based on your human-driven strategy. For example, during peak demand, you might want to adjust your dynamic pricing model to maximize profitability—while during slow times, efficiently clearing out inventory becomes essential.
5. Data Sources
Automation tools are only as good as the data they run on. For each tool you consider, investigate where it gathers competitor data and which metrics it employs to make pricing decisions. Some platforms might use overly simplistic models or rely on lagging data.
To truly stay ahead of the game with pricing, it’s also critical to look for a tool that lets you apply your own data cross-channel. For example, you should be able to use your Shopify shopper data to power your Amazon dynamic pricing strategy.
6. Analytics
Look for a dynamic pricing tool with a robust analytics dashboard.
In a glance, you should be able to understand how your best sellers are moving and make smart pricing decisions based on data—not gut feeling. Make sure your platform’s reporting is comprehensive and can be used to drill down to the product or portfolio level.
7. Usability
Before investing in any new tool, always take time to read reviews to get deeper insights into the tool’s interface and usability. A user-friendly platform with efficient onboarding will minimize the learning curve, allowing your team to focus on strategic planning rather than struggling with technical challenges.
Scale Your Sales and Profitability with Trellis
Dynamic pricing isn’t a nice-to-have, it’s a must for high-growth brands.
Trellis analyzes a year of pricing and sales data to give you deep, actionable insights into the relationship between pricing, demand, and profit. The best part is, these insights aren’t limited to Shopify. You can apply them to your Amazon and Walmart stores—all managed from Trellis’ intuitive platform.
Need to see it to believe it? We’ll show you with a quick demo. Book yours today.