• Price Optimization establishes the prices that will maximize your business results. It is a highly scientific process based on statistical analysis of historical data and your customers’ buying preferences.
• By using price optimization techniques to analyze information about competitors’ price levels and customer behavior related to price levels, companies can find the proper balance between these factors.
• With price optimization, the process of determining the right price of a product has clearly moved away from traditional tools and judgements to an actual data-driven science.
Few decisions have as large an impact on the success of your business as optimizing prices.
High competition, consumer price sensitivity and pressure on margins are the key challenges that a business face every day. Optimizing product price has shown direct correlation with volume sales and thus with the sales margins.
Our Pricing optimization Solutions provides answers to critical pricing and promotions questions:
• What is the optimal price within the range of possible prices for every product/ service?
• How do we price our products or services for maximum profit?
• What market share will we achieve at different price points?
• How much profit do we have to give up in order to buy additional market share?
• What will the impact on our revenues and market share be when our competitors change their prices?
• Which combinations of product prices will maximize profits?
• What will be our market share at these prices?
• What prices will maximize profits if we don’t want to lose more than X% in market share?
• If we introduce a new product, how much will profits increase or will the new product cannibalize our existing products?
• What would the impact be on profits, revenues and market share if we stop selling one of the products in our portfolio?
• How can we increase our market share by X% with minimal effect on our profits?
Our Price Optimization Models help businesses in different stages of product lifecycle for different industry segments:
• Initial price optimization works well for companies with a stable base of long life-cycle products- supermarkets, grocery stores, chemists, drug chains, office-supply stores and commodities manufacturers.
• Promotional price optimization helps set temporary prices to spur sales of items with long life cycles- e-commerce business, newly introduced products, products bundled together in special promotions and loss leaders.
• Markdown/ Discount optimization helps businesses selling short life-cycle products subject to fashion trends and seasonality-airlines, hotels, clothing stores, specialty retailers and mass merchants.
Our Single / Multi-product price optimization Techniques
a. Mixed-integer programming
b. Quadratic programming
c. Robust optimization
d. Price elasticity models
e. Classification and regression
f. Statistical segmentation methods
g. Selection of segmentation criteria
h. Predefined Optimization Algorithms
i. Model validation
j. Decision Tree and Regression Tree
k. Decision Forests
Automating price adjustments
Optimizing high-level KPIs
Decreasing write-off rates