Black Friday has become synonymous with incredible deals and a shopping frenzy. For businesses, it represents a golden opportunity to boost sales and acquire new customers, with a report by The National Retail Federation finding that a record 200.4 million shoppers participated in Black Friday and Cyber Monday sales in 2023 in the US alone. Additionally, many reports suggest that the Black Friday through Cyber Monday weekend alone can account for up to 20% of holiday sales and around 10% of total yearly sales for many retailers .

However, the key to maximizing Black Friday success lies in a well-planned pricing strategy. This guide
will walk you through everything you need to create an effective Black Friday pricing strategy, with a
focus on how predictive pricing can enhance your approach.

Purpose of the guide

In this 7-step guide, we’ll walk you through everything you need to know to achieve your Black Friday goals. You will gain a thorough understanding of how to prepare for Black Friday, craft a winning pricing strategy, execute a robust performance marketing campaign, and analyze your performance. You’ll also learn how predictive analytics can take your pricing strategy to the next level, ensuring you stay ahead of the competition and meet your sales goals. Our aim is to equip you with actionable insights and practical tips that can drive your Black Friday success.

Download the Black Friday Pricing Guide in PDF format

Understanding Black Friday trends

Historical context and evolution

Black Friday originated in the United States as the day following Thanksgiving, marking the start of the holiday shopping season. Over the decades, it has evolved into a global event, with retailers around the world participating in offering massive discounts and special deals. Initially characterized by in-store shopping chaos, Black Friday has significantly shifted towards online shopping, especially in recent years.

The term “Black Friday” itself has an interesting origin. It was first used in the 1960s to describe the heavy and disruptive pedestrian and vehicle traffic that would occur the day after Thanksgiving. However, it soon took on a more positive connotation as the day retailers’ balance sheets would move “into the black,” indicating profitability.

Current trends and predictions

Today, consumers are more inclined to shop online, looking for convenience and better deals. The COVID-19 pandemic accelerated this shift, making e-commerce platforms crucial for Black Friday success. Current trends indicate a preference for early access deals, mobile shopping, and personalized offers. Predictive analytics play a pivotal role in understanding these trends and preparing accordingly.

Retailers are now spreading out their Black Friday deals over several days or even weeks to reduce the single-day rush and increase overall sales – some examples are Cyber Monday, Cyber Week, and even Black November. There’s also a significant rise in mobile shopping, with many consumers opting to make purchases via their smartphones. Additionally, there’s a growing emphasis on personalized offers and customer experience, driven by data and analytics.

Preparing your business for Black Friday success

Black Friday process

1. Setting clear goals

The first step in crafting your Black Friday pricing strategy is to set clear, specific goals. What are your revenue, sales, and profit objectives? Are there specific categories or products you aim to sell off, or are there strategic goals you want to achieve, such as increasing market share or acquiring new customers?

Here’s what to consider when setting your goals:

  • Revenue goals: Determine the total revenue you aim to achieve during Black Friday.
  • Sales volume: Set targets for the number of units sold or the percentage increase in sales volume.
  • Profit margins: Establish acceptable profit margins and pricing thresholds.
  • Inventory clearance: If you need to clear out old inventory, set specific targets for those items.
  • Customer acquisition: Define goals for acquiring new customers or increasing repeat purchases.

2. Developing pricing scenarios

Once your goals are set, the next step is to develop a shortlist of pricing scenarios that could work for Black Friday. Consider different approaches to discounts and rebates, such as flat coupons versus differentiated discounts, and evaluate the pros and cons of each. For example, flat coupons are simple and easy to communicate, but differentiated discounts can target specific customer segments more effectively. By mapping out different pricing scenarios, you can better anticipate how each will impact your goals and prepare to adjust as necessary.

Crafting a pricing strategy that balances profitability with competitiveness is crucial for Black Friday. Depending on your goals, you may choose from several pricing models. Predictive pricing can help you optimize these models by analyzing market trends, customer behavior, and competitor pricing. 

3. Developing marketing scenarios

A successful Black Friday strategy doesn’t stop at pricing; it extends to how you market your products. It’s essential to develop strategic options for your marketing channels. Consider different marketing steering options, such as allocating a certain budget to SEA during Black Friday, promoting certain offers in a newsletter, bundle deals, flash sales, or offering an additional flat coupon.

Your promotional strategy should align with your pricing goals and be tailored to your target audience. Consider the following marketing strategies:

  • Pre-sale marketing: Build anticipation with early promotions, email campaigns, and social media teasers. 
  • Flash sales: Implement time-limited offers to create urgency and boost sales during peak hours.
  • Bundle deals: Offer product bundles at a discount to increase average order value and move more inventory.

Synchronize pricing and marketing

An important, yet often overlooked, aspect to consider is the synchronization of your pricing and performance marketing strategies. Many retailers operate these functions in silos, leading to misalignment—such as price changes not being reflected in ads. By optimizing pricing and marketing in sync, you can streamline your efforts and maximize key performance indicators (KPIs).

Cross-marketing optimization capabilities enable retailers to align pricing and marketing efforts via a joint forecast, allowing them to cut costs and increase results for both. With predictive pricing, it is possible to input different variables, including targeted coupon rates and SEA spending amounts. This can lead to profit increases of up to 15%.

4. Predict and decide

This is perhaps the most challenging aspect of your Black Friday strategy. Here, you’ll need to predict how your different pricing and marketing scenarios will impact key performance indicators (KPIs) such as sold items, stock development, profit margins, and overall revenue. There are several methods you can use for these predictions, ranked by effectiveness:

  • Historic interpolation (e.g., Excel): This is the most basic method, using historical sales data to forecast future performance. It’s easy to implement but may not account for dynamic market changes.
  • Simple stochastic models (e.g., ARIMA): These models use statistical methods to predict future sales based on time series data. They offer more accuracy than simple interpolation but still have limitations.
  • Advanced machine learning models (e.g., Neural networks): For the most accurate predictions, consider using machine learning models that can analyze complex datasets and identify patterns. These models can adapt quickly to new data, providing the most reliable forecasts.

By predicting the outcomes of your scenarios, you can make informed decisions on which strategies to implement, ensuring they align with your goals and market conditions.

Leveraging predictive analytics

Predictive analytics plays a crucial role in crafting an effective Black Friday strategy. By leveraging advanced data analysis, you can predict customer behavior, demand trends, and the impact of your pricing strategy on sales and profit margins. Here’s how predictive analytics can enhance your strategy:

  • Demand forecasting: Use predictive models to estimate product demand, ensuring you have enough inventory to meet customer needs without overstocking.
  • Pricing optimization: Predictive pricing tools can suggest the optimal price points for maximizing sales and profit margins.
  • Sales projections: Estimate potential revenue and profit based on different pricing scenarios, helping you choose the best strategy.

5. Think about customer specific offers

Another crucial element of your Black Friday strategy is to consider how you can tailor offers to specific customer segments. For example, you might offer special incentives to new customers to encourage their first purchase, while rewarding loyal customers with exclusive discounts or early access to deals. 

Personalizing offers not only enhances the customer experience but also increases the likelihood of conversions and repeat purchases. By using predictive pricing, you can ensure that these offers are both competitive and profitable, aligning them with your broader strategy.

Personalization is key to a successful Black Friday strategy. Today’s consumers expect personalized experiences, and businesses that meet these expectations are more likely to succeed. 

6. Evaluate your performance

After Black Friday, analyze your sales data and performance metrics. Identify what worked and what didn’t. Predictive analytics can provide deeper insights into your performance, as you can compare your predictions with the actual results to determine whether your approach was optimal.

  • Sales data analysis: Review your overall sales, conversion rates, and average order value.
  • Performance metrics: Assess the effectiveness of your marketing campaigns and promotional strategies.
  • Competitive analysis: Compare your performance against competitors to identify areas for improvement.

By conducting a thorough post-mortem analysis, you can identify successes and areas for improvement, which will inform your strategies for future sales events.

7. Plan for the future

Use post-Black Friday data to plan for upcoming sales events. Continuous improvement of your pricing strategy is essential for long-term success, and predictive models can use promotional days such as black Friday as data feature. This means that the models learn from past Black Fridays and better predict how customers will behave during future promotional days to deliver more effective insights on KPIs. Leverage predictive pricing for strategic planning, ensuring you stay ahead of market trends and consumer behavior.

  • Data-driven planning: Use historical data and predictive analytics to forecast future trends and plan accordingly.
  • Strategy refinement: Continuously refine your pricing strategies based on performance data and feedback.
  • Long-term goals: Align your Black Friday strategy with your long-term business goals to ensure sustained growth.

By continuously improving and refining your strategies, you can ensure long-term success and stay ahead of the competition.

The role of predictive pricing in Black Friday success

Why predictive pricing matters

Pricing decisions can make or break your Black Friday campaign. Traditional pricing strategies often rely on static price rules and gut feeling, but these approaches can fall short in a rapidly changing market environment. Predictive pricing offers a more sophisticated, data-driven approach that allows you to anticipate market trends, understand customer behavior, and rapidly optimize prices in line with new market conditions.

Key advantages of predictive pricing:

  • Data-driven decisions: Predictive pricing leverages advanced algorithms and machine learning to analyze vast amounts of data. This includes historical sales, current market conditions, competitor pricing, and seasonal factors. By understanding these variables, businesses can set prices that are both competitive and profitable.
  • Rapid adjustments: Black Friday is a dynamic event where demand can fluctuate rapidly. Predictive pricing solutions enable businesses to adjust prices in rapidly, responding to changes in demand, stock levels, and competitor actions. This agility ensures that you can maximize revenue opportunities while avoiding stockouts or over-discounting.
  • Target-based steering: Predictive pricing solutions enable you to optimize your prices towards set targets, whether that is to maximize profits, revenues, hit sales targets, or more. This feature ensures that your pricing strategy can be intuitively aligned with the overall goals of your business.
  • AI-Based forecast: Run scenarios for different pricing and marketing strategies. Select the scenario that maximizes your goals. 
Predictive pricing advantages

Choosing the right predictive pricing solution

Selecting the right predictive pricing solution is crucial for maximizing your Black Friday success. Look for key features such as:

  • Advanced algorithms: Ensure the solution leverages cutting-edge machine learning to deliver precise pricing recommendations.
  • Real-time analytics: Your tool should process data rapidly, allowing for immediate price adjustments in a fast-paced environment.
  • User-friendly interface: The solution should be intuitive and provide actionable insights without requiring a technical background.
  • Scalability: Choose a solution that grows with your business, handling increasingly complex data and strategies.
  • Integration capabilities: Seamlessly sync your pricing strategy with marketing, inventory management, and other systems to streamline operations and optimize outcomes.

How 7Learnings' predictive pricing solution can help

Our predictive pricing solution is specifically designed to meet the challenges of Black Friday. Here’s how it can empower your business:

  • Precision and agility: Our advanced algorithms provide optimal pricing recommendations that adapt in real-time to market shifts and competitor actions.
  • Sync pricing with performance marketing: Sync your pricing strategy with performance marketing to ensure both functions are delivering optimal results. By doing so, you maximize key performance indicators across both pricing and marketing channels and avoid the common pitfalls of misalignment.
  • Comprehensive insights: Beyond pricing, our solution offers deep insights into product performance and promotional impact, allowing you to refine your strategy for long-term success.

By choosing our solution, you gain a competitive edge, aligning pricing with your overall business goals for a successful Black Friday and beyond.

Incorporating predictive pricing into your Black Friday strategy is not just about setting competitive prices—it’s about anticipating market demands, understanding customer behaviors, and staying agile in a fast-paced retail environment. With the right tools and strategies, you can maximize your sales, build customer loyalty, and set your business up for sustained growth beyond the Black Friday weekend.