“At its best, dynamic pricing reduced food wastage”
Kotipizza’s home deliveries were priced based on demand during a one-month trial period. During the trial, home deliveries ordered from Kotipizza’s online store were dynamically priced by Priceff. As a result, the number of deliveries increased by 54% and revenue by 19%.
Who doesn’t love pizza! Many people tend to pamper themselves in their spare time, so
it isn’t surprising that most pizzas are delivered during the weekends. That said, capacity is being wasted, as there is a lot of room for more pizzas to be delivered during times of low demand. This made Kotipizza decide to team up with Priceff to increase sales during low demand by dynamically pricing their deliveries.
The price of Kotipizza’s home deliveries is normally €5.90. During the trial the price was updated by the pricing algorithm based on the real-time demand every five minutes. The price fluctuated between €0.10 and €5.90 to follow the demand.
The trial lasted four weeks, during which home deliveries were priced dynamically from the low demand periods of Monday to Wednesday from 10 am to 4 pm. The aims were to see if dynamic pricing could increase sales during low demand and to minimize the risk during the trial.
The results of the trial were very positive. The number of deliveries increased by 54% and revenue by 19%. The trial was a win-win situation, with customers paying less for delivery, while Kotipizza increased its revenue.
A clear majority of the customer feedback was positive, and the trial also got a lot of positive coverage in the Finnish media. Dynamic pricing was considered something that brings value not only to the company but also to its customers.
Customer Experience Director of Kotipizza Group:
“The pricing trial for home deliveries supports our strategy, which emphasizes digitality and delivery, and offers an excellent opportunity to present the possibilities of dynamic pricing to the franchisees of Kotipizza and their customers. At its best, dynamic pricing reduced food wastage and enhanced the home delivery rates of our restaurants. Kotipizza learned a lot from this trial.”