What is a Dual Rate System in E-commerce?
Dual pricing or dual rate system in e-commerce involves offering different prices for the same product or service to different customers.
For example, a retailer might discount customers who purchase online while charging a higher price to those who walk into the store. Dual pricing allows retailers to reap maximum benefits from the different preferences of their customers and increase their profits.
Significance of Dual Rate system in E-commerce Logistics
The dual rate system in e-commerce logistics is a pricing structure that offers customers various rates for different service levels.
- The system allows customers to pay for the level of service they require rather than a flat rate for all services.
- A dual rate system allows customers to save money on services they don’t need and pay more for ones they need.
- It also helps companies become more efficient and reduce costs, as they can tailor services to customer needs and budgets.
- A dual rate system gives customers more control over their shipping costs and increases transparency for shipping charges.
- Such a system can also help businesses increase customer satisfaction by providing greater flexibility in pricing and services.
Prerequisites to Calculate Dual Rate System
- Understanding the underlying market conditions clearly. To accurately calculate dual pricing, it is important to access accurate market data, such as prices for similar products.
- Understanding the pricing strategies of competitors, including discounts and promotions.
- Additionally, pricing structures, such as cost-plus pricing, must be considered when calculating dual pricing.
Use Case with Dual Rate System
The dual rate system is mainly demand based. For instance, an airline company tends to offer a lower price to an early customer for a specific booking if he is availing of the service far in advance than the travel date. But, the same company will impose a very high price for the same booking to a customer coming in last minute for the same journey.