Dynamic pricing for online retailers: strategies, guardrails and tools
"Dynamic pricing" usually brings to mind airlines and taxi apps. For a store that resells supplier products it means something much more practical: prices that follow real changes in costs and in the market instead of staying frozen until someone has time to edit them. There are several ways to do it, and most stores end up combining two or three.
Five strategies and when each one fits
1. Cost-based pricing that updates itself
Supplier cost plus a markup, recalculated every time the cost changes. This is the foundation. Without it, a supplier price increase quietly eats your margin until someone notices.
Fits: large catalogs, products with little direct competition. Risk: ending up above the market when one supplier is expensive.
2. Competitor-based pricing
The price follows a set of competitors: equal to the lowest, a fixed amount below it, or within a band around the market median.
Fits: popular branded products that customers compare. Risk: following a competitor who is selling at a loss. Never use it without a price floor.
3. Best-supplier pricing
When several suppliers carry the same item, the price is calculated from the cheapest offer that is actually in stock, or from the preferred supplier while it has the item.
Fits: stores with overlapping suppliers. Risk: very cheap offers from suppliers with unreliable stock. Supplier priority solves it.
4. Time-based pricing
Different markups by season, day of the week or time of day, following predictable demand.
Fits: seasonal and gift categories. Risk: changes so frequent that returning customers notice.
5. Stock-based pricing
Slightly higher prices when stock is scarce, lower when there is too much of it.
Fits: your own warehouse stock and clearance. Risk: applying it to supplier stock you do not control.
What should actually move your prices
- Supplier costs: the most important input and the most often ignored.
- Exchange rates: if you buy in one currency and sell in another, your cost changes overnight. Keep the rate under your control so you decide how fast to pass it on.
- Competitor prices: decisive for compared products, almost irrelevant for accessories.
- Availability: when only one supplier still has an item, there is less pressure to be the cheapest.
Guardrails come first
Before any rule changes prices automatically, set the limits:
- a minimum price per product, based on cost and minimum margin;
- a ceiling, or the recommended retail price where a brand requires it;
- the largest change allowed in one update;
- products that are never repriced automatically.
With these in place, a broken supplier file or an unusual competitor price cannot push your catalog to absurd values. Imagine a supplier file that suddenly lists prices in cents instead of euros: with a floor and a maximum change per update, such an update is simply rejected instead of reaching the store.
A note on personalised prices
Charging different customers different prices for the same product based on their profile is restricted or needs disclosure in many countries, and it destroys trust when people find out. Separate retail, marketplace and wholesale prices achieve most of the same goals openly.
Choosing a tool
Many "smart pricing" tools only change prices on a timer or copy competitors. Before choosing one, check:
- Does it start from your purchase price, imported from supplier price lists or APIs?
- Can it handle several suppliers for one product and choose between them?
- Does it support markups by category, brand and price range, recommended retail prices and a minimum margin?
- Can it keep separate prices per channel and export them to your platform and feeds?
- Can you see what changed and why, and exclude products from automation?
YfiFX was built around these points. It calculates prices from supplier costs with markups by category, brand, price range, day of the week and time of day, takes exchange rates, recommended prices and supplier priority into account, can price from the cheapest offer among suppliers and protects against dumping. Competitor monitoring adds market data, and price types keep retail, marketplace and wholesale prices apart.
A setup that works for most stores
- Cost-based markups by category, brand and price range as the base.
- Best-supplier selection where products overlap.
- Competitor-based adjustment for the 10–20% of products customers compare most, within the guardrails.
- Time-based tweaks only where demand clearly differs.
Measure before and after for the same categories: units sold, average margin and how often a product was sold below target. Adjust the rules, not individual prices.
Set it up once. YfiFX does the rest
14 Days Free Trial. Sign up and import your first price list today.