Algorithmic pricing

Algorithmic pricing is the practice of automatically setting the requested price for items for sale, in order to maximize the seller's profits.

Dynamic pricing algorithms usually rely on one or more of the following data.

• Probabilistic and statistical information{{Cite web |last=Cohen |first=Maxime |last2=Spittle |first2=Tim |last3=Royer |first3=Jimmy |date=September 16, 2024 |title=Assessing Algorithmic Versus Generative AI Pricing Tools |url=https://www.analysisgroup.com/globalassets/insights/publishing/2024_assessing_algorithmic_versus_generative_ai_pricing_tools.pdf |access-date=April 8, 2025}} on potential buyers; see Bayesian-optimal pricing.
• Prices of competitors. E.g., a seller of an item may automatically detect the lowest price currently offered for that item, and suggest a price within $1 of that price.{{cite book|doi=10.1145/2872427.2883089|chapter-url=http://dl.acm.org/citation.cfm?id=2883089|pages=1339–1349|year=2016|last1=Chen|first1=Le|last2=Mislove|first2=Alan|last3=Wilson|first3=Christo| title=Proceedings of the 25th International Conference on World Wide Web | chapter=An Empirical Analysis of Algorithmic Pricing on Amazon Marketplace |isbn=9781450341431| s2cid=9570936 }}{{cite web | url=http://bostinno.streetwise.co/2016/04/12/amazon-marketplace-pricing-structure-advice-for-sellers/ | title=The Truth Behind Pricing Algorithms on Amazon's Marketplace | accessdate=29 June 2016 |first=Olivia |last=Vanni |date=2016-04-12 |url-status=dead |archiveurl=https://web.archive.org/web/20160413203827/http://bostinno.streetwise.co/2016/04/12/amazon-marketplace-pricing-structure-advice-for-sellers/ |archivedate=2016-04-13 |work=BostInno}}{{cite web |title=Amazon Repricer For Professional Sellers |url=https://sellersnap.io/}}{{cite web |title=Best Amazon Repricer - Repricing Software Tool|url=https://alpharepricer.com/}}
• Personal information of the currently active buyer, such as her or his demographics and her or his interest in the product. If the seller detects that you are about to buy, your price goes up.{{cite web | url=https://www.quora.com/What-are-the-principles-behind-Amazons-algorithmic-pricing-and-what-do-they-achieve | title=What are the principles behind Amazon's algorithmic pricing and what do they achieve? | date=2013 | accessdate=29 June 2016 | author=Robert Wagner}}
• Business information of the seller, such as the expected date in which he or she is going to receive new stocks, or her or his target selling velocity in units per day.{{cite web | url=https://www.marketingtechblog.com/algorithmic-pricing-maximize-profits/ | title=How to Use Algorithmic Pricing to Maximize Profits | accessdate=29 June 2016 | author=Douglas Karr | archive-url=https://web.archive.org/web/20160601103905/https://www.marketingtechblog.com/algorithmic-pricing-maximize-profits/ | archive-date=1 June 2016 | url-status=dead }}