PRICE OPTIMIZATION

How do you set prices?

The way a company sets its prices has an impact on its financial statements. All too often, companies tend to set prices that do not optimize profits using methods such as: cost-plus pricing, pricing relative to a similar product or substitute, gut feel, or a combination of these methods. A poorly set price affects volume, costs, and eventually the bottom line.

How should you set prices?

If you want to stop relying on gut feelings or rules of thumb, our Pricing and Profitability Optimization techniques will transform your data into valuable insights that can increase both the top and bottom line. We demystify customer behavior and provide strategies for higher business performance by analyzing price sensitivity, purchase and use patterns, loyalty programs and more. By analyzing a continuing stream of data, our pricing optimization tool evolves over time to maximize your profits into the future.

Our Approach

Economists, statisticians, programmers, and strategy experts at Advanced Analytical Consulting Group (AACG) have assisted numerous clients with their price optimization needs. Our approach consists of building a sophisticated optimization engine that draws on decades of research and experience, but is heavily customized to the client’s business model and go-to-market strategy. The engine is powered by multiple analytical and statistical models that compete against each other to generate various revenue and profit scenarios. Clients choose and implement an optimal pricing scheme that is aligned with their long-term and short-term business objectives.

Inputs, Engine and Ouputs

The price optimization engine and the underlying models are designed to receive data feeds as often as possible – multiple times per year, weekly, daily or even hourly. Using this information, the engine evolves over time to determine how you can further optimize prices, promotion, and advertising to maximize profits as customer and competitive behavior changes.