What is Time-Based Pricing?

By Thomas Bennett Financial expert at Priceva
Published on March 23, 2023
If you are looking for ways to increase your profit margin, raising prices seems to be an obvious solution. However, it should be done carefully so as not to lose customers. Time-based pricing is a must for sellers who want to build an optimal strategy – this approach allows maximizing profit by lowering and raising prices at the right moments. Find out how this pricing method works and discover how it can be implemented in online retail.

Time-Based Pricing Examples

Initially, this pricing strategy was applied to the relationship between the rate of work and the cost of work: for instance, employees are paid more when they work faster. In the retail industry, time-based pricing has a different meaning. This approach implies correcting prices over a certain period of time. Most likely, you’ve encountered it when shopping for clothes and seasonal products.

Parking meters are a good example of a time-based pricing model. For instance, parking lot owners can raise prices during the busiest times, when there are many customers. At the same time, they can charge less on the weekends and after work.

The following sectors employ time-based pricing most frequently:

  • Airlines. We all know that it is a better deal to buy tickets in advance, while same-day or next-day tickets are very costly.
  • E-commerce. Prices in the industry are greatly influenced by the time of year and the day of the week – they mainly depend on seasons.
  • Ride-hailing. In this industry, prices vary according to the weather and the level of demand.
  • Holidays, special occasions, and events affect prices – sellers charge more when people rush to buy presents, decorations and so on.

These examples highlight the flexible nature of time-based pricing. This approach stresses external factors, whereas value-based pricing concentrates on providing value to customers.

Advantages of Time-Based Pricing in Retail

While time-based pricing is often discussed in the context of employee salary and business economics, this approach is also used in the retail industry. Here is how it can be useful.

Better Flexibility

Price reductions are occasionally necessary and can frequently stimulate sales to meet revenue targets. This dynamic strategy makes it possible to adjust prices in response to competitor data, internal stock levels, and market trends. As a result, it is possible to maintain your market share and enjoy increased profit. So why not use it?

Thanks to dynamic pricing, brands and merchants can apply pricing rules to different categories of customers dynamically, automatically, and in bulk.

Profit Boost

Dynamic pricing is not only about price reductions – it implies price increases too. Sometimes, the market itself dictates that merchants should raise prices, and you can definitely do that when competitors’ rates are much higher.

Automation Reduces Costs and Saves Time

Sellers that use dynamic pricing software are able to keep up with pricing trends – they are always ahead of the competition. Of course, manually repricing thousands of SKUs is too time-consuming and inefficient. This is where pricing software comes into play. It makes it possible to track market trends in real time and can automatically update prices in online stores.

What is Wrong With Time-Based Pricing?

Despite the above-mentioned advantages, time-based pricing can have a negative impact on customers’ purchasing decisions. Here are the major risks that you should consider and try to avoid when leveraging this approach.

Frustrated Buyers

Real-time pricing may have the unfavorable effect of upsetting or even infuriating customers who find out they were the victim of price discrimination. For instance, if airline passengers compare the cost of their tickets, one passenger may learn that he paid twice as much as another. People could feel tricked and frustrated in such a case.

Reduced Client Loyalty

Time-based pricing can harm a company's brand loyalty if it makes customers irritated or furious. When customers know what prices to expect, they are more likely to buy from a particular seller again and again rather than shopping around and looking for better prices elsewhere. Not only can it hurt sales, but it may also result in negative reviews.

Heightened Competition

When consumers are not devoted to a specific brand, they will go wherever they can find the best discounts. Online buyers can rapidly compare costs for the same goods and services at several vendors. Using time-based pricing strategies, a business can provoke rivals to cut their prices in an effort to introduce better deals. Reduction of product prices and lower profit margins that can result from more competition is good for consumers, but bad for businesses.

Time-Based Pricing vs. Value-Based Pricing

Since time-based pricing has existed since man first created clocks, it has been so established that neither businesses nor customers can imagine doing things any other way. It seems to be natural that customers are ready to pay more during a high season when they need a product or service here and now.

Similarly, value-based pricing has been around for a while, but under a different name. Value-based pricing is used whenever someone provided a service that was based solely on perceived value, regardless of season or time. In comparison with time-based pricing, the value-based approach makes it possible to adjust prices less often if demand for a product is stable. In this case, quality and value serve as the major driver of price.


As part of a dynamic pricing strategy, the time-based method allows reaping maximum profit out of your stock. This approach takes into account demand and different market conditions, which makes it more flexible and efficient. However, it can be tricky: when buyers discover that they paid more than others, they may feel tricked and lose loyalty to a brand.

If you run an online store, time-based pricing can be a great way to increase your earnings by adjusting prices in a timely manner. No need to spend hours doing that – just start using dynamic pricing software by Priceva. It will keep tabs on market trends and help you keep your prices competitive, no matter how high the demand is.


How do companies use time-based pricing?

Businesses often use time-based pricing to encourage customers to make quick purchases (for example, by introducing limited-time offers). Also, time-based pricing is used when buyers pay extra for one-day delivery, when prices surge during rush hours, or when airline tickets cost less only if they are bought in advance.

How can I apply time-based pricing in online retail?

You can adjust prices according to seasons and customer demand: charge more when people buy more, and charge less when there’s customer outflow. If your assortment is large or you run several retail stores, consider automating price updates by using pricing software.

What technologies help configure time-based pricing?

You can use pricing software that will update prices automatically in all your online stores. Such a solution will help you automate price analysis on the market and provide suggestions based on real-time data.

Empower Your Business with Priceva's Price Tracking Solution
Take charge of your pricing strategy with Priceva's powerful price tracking tools.
More to explore