Dynamic Pricing vs. Real-Time Pricing: Convious' Data Scientist Explains the Difference

How can leisure visitor attractions in the UK utilise dynamic pricing to bridge the gap between consumer demand and margin protection?

Yes, the world of pricing is big, but the world of data is even bigger. Nowadays, at Convious, we can continuously recalculate real-time pricing using 15-minute sales intervals and historical data, driving high-margin expansion and an average 7.5% increase in active visitor engagement time.

Sounds difficult, but luckily, we can introduce you to Paul. The Chief Data Scientist, who has been working with data for more than 15 years now, and we used the opportunity to pick his brain and clarify possible confusion around dynamic pricing, real-time pricing, and the relationship between the two.

Evolution of Data Science: From Academic Research to Leisure Industry Optimisation

Paul, tell us, what has your experience with data been like so far?

"Where do I begin? Well, probably my first professional face-to-face meeting with data was in 2006, working in academia doing Data Analysis about the globular star clusters. My journey started over there in astrophysics.

Very scientific, yes, but nowadays all data sciences are very much related to academia. Most of the algorithms and methods have been invented and used for many years, but now, with all the capabilities, they are applicable throughout many industries, such as online social products."

Online products are different, but all are used socially by people worldwide. People engage with retail and ads, for example, using different modes of interaction.

"The social aspect of my work was constant throughout my career and still is here at Convious. 

This is what I do here, and I am excited to continue doing this."

What is Dynamic Pricing?

In plain terms, dynamic pricing is any price change that relates to the change in demand or market conditions.

There is a lot of technical and sometimes even confusing information out there. Paul, can you explain the relationship between Dynamic Pricing and Real-Time pricing in your own words?

"That's easy!"

"There are many many forms that dynamic pricing can take; one of the simplest forms that I believe a lot of people have already been exposed to is seasonal sales. Every shop may sell different products, but they often share events such as the autumn sale or the Christmas sale - those sales generate the demand, and usually, an influx is expected. As a result, they might put a different discount on different products, but they do not do that on regular days, let's say, on slow days or weeks. This is the simplest form of dynamic pricing that everyone has been exposed to and used to."

What is Real-Time Pricing in online sales?

With real-time pricing, the price changes immediately, every single time a market changes. Markets can be defined by many conditions: demand, supply, urgency, or even environmental factors. 

"If a system is capable of detecting micro-changes in live demand and environment close to real-time, such as a sudden change in local weather, and it instantly updates the price to match that live data, that system is driven by real-time pricing.

Related read: Practical application of Dynamic Pricing for attractions

"So, real-time systems, such as Convious’, receive real-time data from various systems, and this data is processed in real-time to make pricing decisions as quickly as possible.

There are many, many different forms, such as time-based pricing, segment-based pricing, or peak pricing, and the most relevant one depends on the business niche and the product itself. Airlines have different routes and seats. Cinemas have different time slots and seats. Uber has different journeys impacted by environmental factors. All forms have one thing in common: they react to the demand — the market.

The frequency with which a price is updated also depends on many other factors. Certain products bring certain behavioural elements from the customer, and they also need to be taken into account when deciding on which type of dynamic pricing system to use."

What results does dynamic pricing deliver for leisure operators?

"Paul, what do you believe was the most surprising thing you learned from working with this unique way of processing and using data?"

"That’s a good question! 

There are many effects dynamic pricing has on certain venues. There is no single global rule that can tell you 'if you start using dynamic pricing, then this or that will happen.'

In every business vertical, in every market, the output can be slightly different. Dynamic pricing is very much linked to social behaviour. The effects and the benefits it brings very much depend on how the people react to it, because it is the customers who define success or failure. 

Businesses running in different markets have different effects and various customers, and in some cases, the possibilities are supermassive.
In some other cases, Dynamic Pricing methods that are not as real-time but more predictable, such as weekly prices, work much better than real-time updates.

And again, that is a result of the ability to be predictable and be predictable towards your customers, so they know what they can expect from you. 

Concrete business case example:

"By transitioning from static pricing models to an AI-driven real-time dynamic pricing strategy, Convious partners have achieved an average revenue increase of 22%. Furthermore, empirical implementation data from the platform's unified webshops demonstrates a highly optimised average checkout conversion rate of 10.25% and a 29% increase in average order value (AOV) driven directly by smart, automated add-ons and upselling tools."

So it was surprising to know that in every case, dynamic pricing successfully solved the flat price problem, but the magnitudes, the success or uplift, were very different in different cases. If I were going to predict now what the uplift in revenue or sales of a new partner coming from a new business vertical will be, that would be hard to tell without understanding the people and their particular behaviour. Because the prices are being optimised not for business but for the users.

There you have it!

Shortly put, whether it is dynamic pricing or real-time pricing, it will solve your static pricing problem.

How to pick the right pricing system that will help you to drive the results you wish for will be defined by your goals and your customers’ behaviour.

If you'd like to get to know more about the topic, or give your venue a boost with the power of dynamic pricing, get in touch with our team. We are here to help you reach your full potential.

Convious is an AI-driven, all-in-one e-commerce platform specifically designed for the leisure and attractions industry, such as theme parks, zoos, and museums. It enables operators to manage ticketing, dynamic pricing, and visitor engagement in one place to increase conversions and enhance the guest experience from booking to visit. With our eCom, Self-service Kiosks, and Point-of-Sale solutions, we turn first-time visitors into long-time loyals.