Dynamic Pricing Strategies for Small Retailers Using Excel & AI

Dynamic pricing allows small retailers to stay competitive by automatically adjusting prices based on demand, competitor pricing, and inventory levels. With Excel, you can implement AI-powered pricing models to optimize revenue while maintaining customer satisfaction.

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Step 1: Setting Up a Pricing Data Sheet

Create an Excel sheet with the following columns:

Product ID	Product Name	Cost Price	Current Price	Competitor Price	Demand Level	Stock Level	Suggested Price

• Cost Price – The base cost of acquiring the product.
• Current Price – The selling price before any adjustments.
• Competitor Price – Price of the same product at competing stores (can be scraped using Excel Power Query).
• Demand Level – High, Medium, or Low, based on historical sales data.
• Stock Level – Number of units available.
• Suggested Price – A dynamically calculated optimal price.

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Step 2: Using Excel Formulas to Adjust Pricing

1. Dynamic Pricing Based on Competitor Prices

Adjust price based on competitor data:

=IF(E2<C2, C2-5, IF(E2>C2, C2+5, C2))

• If the competitor’s price is lower, reduce price by $5.
• If the competitor’s price is higher, increase price by $5.
• Otherwise, keep it the same.

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2. Demand-Based Price Adjustment

Increase prices for high-demand products, lower them for low-demand ones:

=IF(F2="High", C2*1.10, IF(F2="Low", C2*0.90, C2))

• Increases price by 10% for high demand.
• Reduces price by 10% for low demand.

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3. Stock-Based Discounting

If stock is too high, lower prices to move inventory faster:

=IF(G2>100, C2*0.95, C2)

• If stock is over 100 units, apply a 5% discount.

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Step 3: Automating Competitor Price Tracking with Power Query

Use Excel Power Query to import competitor prices from online sources or CSV files.

1. Go to: Data → Get & Transform → Get Data → From Web.
2. Enter the competitor’s pricing URL (if public) or upload a CSV file.
3. Set up auto-refresh: Data → Queries & Connections → Properties → Refresh every 30 minutes.

Now, competitor pricing will automatically update in Excel.

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Step 4: Implementing AI-Powered Price Forecasting

Excel’s FORECAST.ETS function predicts optimal pricing based on past trends:

=FORECAST.ETS(TODAY()+7, D2:D100, A2:A100)

• Predicts price trends for the next 7 days using historical data.

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Step 5: Automating Price Adjustments with VBA

To update prices automatically, use a VBA Macro:

1. Open VBA Editor (ALT + F11) → Insert Module

2. Add this VBA script

Sub AdjustPrices()
    Dim ws As Worksheet
    Dim lastRow As Integer
    Dim i As Integer

    Set ws = ThisWorkbook.Sheets("PricingData")
    lastRow = ws.Cells(Rows.Count, 1).End(xlUp).Row

    For i = 2 To lastRow
        If ws.Cells(i, 6).Value = "High" Then ' Demand Level
            ws.Cells(i, 8).Value = ws.Cells(i, 4).Value * 1.10 ' Increase Price
        ElseIf ws.Cells(i, 6).Value = "Low" Then
            ws.Cells(i, 8).Value = ws.Cells(i, 4).Value * 0.90 ' Decrease Price
        Else
            ws.Cells(i, 8).Value = ws.Cells(i, 4).Value ' Keep same
        End If

        ' Stock-based discount
        If ws.Cells(i, 7).Value > 100 Then
            ws.Cells(i, 8).Value = ws.Cells(i, 8).Value * 0.95
        End If

        ' Competitor-based price change
        If ws.Cells(i, 5).Value < ws.Cells(i, 4).Value Then
            ws.Cells(i, 8).Value = ws.Cells(i, 4).Value - 5
        ElseIf ws.Cells(i, 5).Value > ws.Cells(i, 4).Value Then
            ws.Cells(i, 8).Value = ws.Cells(i, 4).Value + 5
        End If
    Next i
End Sub

Run the macro to automatically adjust pricing based on demand, stock, and competitor prices.

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Step 6: Visualizing Price Trends with Excel Charts

1. Create a Line Chart:

• Select Product Name & Suggested Price.
• Go to Insert → Charts → Line Chart.

1. Add a Slicer for Filtering:

• Insert → Slicer → Select “Demand Level”.
• Filter charts dynamically by demand type.

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Step 7: Tracking Revenue Impact

Monitor how pricing adjustments affect sales:

Date	Product	Old Price	New Price	Units Sold	Revenue
01/01	Widget A	$20	$22	100	$2,200
01/02	Widget B	$15	$14	150	$2,100
01/03	Widget C	$25	$27	80	$2,160

Use SUM and AVERAGE formulas to track performance over time.

=SUM(F2:F100) ' Total Revenue
=AVERAGE(F2:F100) ' Average Revenue per Product

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Key Benefits of AI-Powered Dynamic Pricing in Excel

✅ Maximizes Profits – Optimizes pricing based on demand and competition.
✅ Saves Time – Automates manual price adjustments.
✅ Reduces Overstock Losses – Adjusts prices to move excess inventory.
✅ Increases Competitiveness – Keeps prices aligned with market trends.
✅ Predicts Future Demand – AI forecasting ensures proactive pricing decisions.

By leveraging Excel formulas, Power Query, and VBA, small retailers can implement AI-driven dynamic pricing without expensive software.