5 Pricing Strategy Mistakes Retailers & Brands Make

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Today’s retail landscape looks nothing like it did five years ago. Social commerce and the rapid advancement of artificial intelligence have reshaped the industry, putting consumers in control. Shoppers are more unpredictable, more demanding and more price-sensitive than ever.

Brands face growing pressure from fast-moving competitors like Temu and Shein. Meanwhile shoppers of all ages navigate multiple channels with ease. In fact, 73% of retail shoppers interact with more than six touch points such as online, in-app, in-store and social media before making a purchase, according to our latest guide Price Optimization: A New Pocket-Guide for Retailers.

Staying competitive today requires more than traditional tactics. The most effective strategies rely on AI to respond to market shifts with speed and precision.

This article explores five common pricing strategy mistakes retailers and brands make and how industry leaders are overcoming them with data-driven, AI-powered approaches to stay competitive and protect profitability.

1. Over-reliance on discounts

Discounting often creates a vicious cycle. When products fail to sell, brands turn to markdowns. Shoppers then expect sales and hold off on purchases until prices drop. Margins shrink and businesses scramble to recover profits, sometimes reducing product quality to offset losses. Over time, this erodes brand value and threatens long-term sustainability.

Heavy discounting also damages reputation. More than 60% of companies that frequently rely on markdowns experience a measurable decline in loyalty and perception within two years, according to a 2024 industry analysis.

Strategic promotions, limited to key retail moments, help break this cycle. Access to real-time data enables pricing teams to make faster, more informed decisions that protect margins and brand perception while sharpening competitive positioning.

2. Relying on outdated tools and manual processes

Spreadsheets and legacy systems such as ERPs and PIMs were not built for the speed, complexity and agility required in this market. Yet many businesses still depend on outdated methods for pricing strategies and operations. This leads to slower responses, miscommunication, manual errors and limited visibility into internal and competitor data.

Stock imbalances often arise from these limitations. Over-ordering slow sellers or understocking popular items leads to excessive markdowns or lost full-price sales, both of which reduce profitability.

AI-driven pricing solutions integrated with a product lifecycle management system distinguish brands that thrive from those struggling to keep pace.

3. Operating in organizational silos

As businesses grow, silos between teams often form and complicate daily operations. Pricing decisions that span multiple departments frequently suffer from these divides, leading to misalignment and costly mistakes.

Merchandising, marketing, e-commerce, finance and supply chain teams perform best when fully aligned. Yet many operate on separate priorities and timelines. This disconnect delays decisions, weakens pricing strategies and undermines overall performance. Without real-time coordination, even well-planned pricing moves may backfire, reducing profitability and damaging trust.

A shared platform unifies business functions by connecting product development, planning and pricing data. Centric Pricing & Inventory™ brings inventory, merchandising, pricing and executive teams together to respond faster to change and make more accurate, margin-focused decisions across the product lifecycle.

4. Failing to align pricing with inventory and demand forecasting

Many retailers still rely on manual methods to predict product demand. They pull historical data, rely on gut instinct and gather competitor insights through time-consuming research across websites, promotions and pricing trends.

This approach often leads to poorly timed price changes, whether reducing prices too late, setting them too high or being overly aggressive. The outcome is usually excess stock or missed revenue.

Overstocking triggers markdowns, higher storage costs and eroded margins. Understocking frustrates customers, harms brand perception and leaves sales untapped.

AI-powered pricing technologies removes guesswork. Real-time insights support pricing that stays in step with inventory levels and consumer demand, keeping businesses ahead of the competition.

5. Ignoring AI and competitive pricing intelligence

Pricing challenges often come down to one thing: complexity. Shoppers are unpredictable, competitors move quickly and market conditions shift without warning. That’s why leading brands are leaning into AI. With real-time insights on customer behavior, competitor moves and market trends, AI-powered pricing strategies give teams the ability to make smarter decisions that protect margins and keep the business growing.

AI transforms pricing by analyzing real-time and historical data, including sales trends, competitor pricing, inventory levels, customer behavior and market conditions. It identifies patterns, forecasts demand and recommends optimal prices while continuously learning and adapting. Traditional manual methods no longer keep up.

AI enables brands to set precise, strategic pricing that preserves premium positioning on high-value items while staying competitive on commodity products. This approach protects margins, strengthens market position and ensures pricing remains aligned with consumer behavior and business objectives.

Conclusion

Avoiding pricing pitfalls starts with forward-thinking leadership and the right technology. AI-powered pricing solutions, when integrated with foundational platforms like PLM, deliver the speed and precision required to compete in today’s market. Teams that execute dynamic, lifecycle and competitive pricing strategies will stand stronger against agile online retailers gaining global market share.