Optimizing the price you set for products and services through machine learning
What is Price Optimization using AI?
Imagine if you could adapt your prices or discounts at a given frequency so you could optimize your margins, or sales, or both, depending on demand, weather,stocks, and so on. This is what AI based dynamic pricing is about. Adapting prices depending on several factors is impossible when it comes to high volumes of products or customers. Price analysts and managers often apply rules that are not tailored to the specifics of the customer, the product, the stocks...and of everything combined together. With dynamic pricing, Kantify helps its clients set the prices that will maximize their profitability. Kantify’s expertise in developing solid dynamic pricing solutions was recognized by the demanding Wall Street Journal.
Why Using AI for Pricing?
Dynamic pricing is an upcoming trend in many industries. Think about gas prices, plane tickets, hotel rooms, Uber 'surge price', etc. Prices evolve in an automated way, taking into account several variables.
Reflect the variability of your business in your prices
Dynamic pricing enables companies to automatically or semi automatically adjust their prices when certain variables change, such as demand, weather, stocks and so on. When we work with new clients on dynamic pricing project, we ensure that we closely map and reflect these variables in their dynamic pricing solution.
Set prices to achieve your financial goals
With Dynamic Pricing, prices are set to achieve a determined goal, that can be different depending on your markets, segments, or products. The price setting will be different if you choose a high sales volume or increasing margins. This is why, at project start, the major constraints and challenges to the dynamic setting of prices must be identified. This is for example customer sensitivity to price change. If your customers may be sensitive to a frequent change of price for certain products, we will reflect this in the solution so dynamic price setting does not affect other parts of your business, such as your brand.
Have an explainable price
The dynamic pricing solution can either fix a price, or suggest a price so the price manager can take a decision accordingly. The specificy of the Kantify approach is that our solutions justify and explain their price recommendations. This is called 'explainable AI'.
In that way, price managers can understand the combination of variables that were used to come up with this suggestion. Price managers can therefore decide what drives a certain price recommendation and decide to follow the suggestion, or not to follow it.
Focus on decision-making
Making the right decision about a price is complex, for example in the case of a new customer, a volatile demand, or a large, highly diverse customer pool. Dynamic pricing can augment the work of your collaborators by suggesting the right price. This helps your collaborators to take a data-driven decision. AI can assist your collaborators by analyzing large volumes of data and defining an optimal price. Such analysis is not possible by humans, because of complexity and volumes.