What does "dynamic pricing" refer to?

Dynamic pricing refers to the strategy of adjusting prices based on current market demand and various other factors, such as competitor pricing, customer behavior, and even time of day. This approach allows retailers to optimize their pricing in real time, maximizing revenue by capitalizing on peak demand periods or adjusting to lower demand by reducing prices.

By employing dynamic pricing, businesses can remain competitive and agile in a rapidly changing market environment. For instance, during high-demand periods, such as holidays or special events, prices may increase, while during slower periods, they may decrease to encourage sales. This flexibility serves to enhance both sales and customer satisfaction, as it creates opportunities for consumers to find competitive prices relative to their purchasing behavior.

In contrast, other options suggest static pricing strategies or specific promotional practices that do not align with the dynamic nature of pricing that adjusts with market conditions.