AI for Marketing and Product Innovation

9 Applications for Pricing Dynamics

Artificial Intelligence is not a Man versus Machine saga; it’s in fact, Man with Machine synergy.

– Sudipto Ghosh, quoted in “Famous Business Quotes on Success,” http://www.bestquotes.io/famous-business-quotes-success/

Imagine Algorithmic Pricing, which has:

• Built in heuristics-based models for pricing, so the user chooses the kind of models to deploy
• Pricing dynamics that leverage all the principles of control system theory
• Pricing control algorithms that dynamically alter price using PID (proportional, integral, and derivative) controllers
• Real-time volume estimators that estimate volume based on systemic, environmental, and dynamic observables
• Daily, hourly, and real-time discounts delivered based on customer and controller outputs
• Psychographic and behavior models that augment and temper strict price volume relationships.

Pricing Dynamics (also known as revenue management) is a pricing strategy where prices change based on real-time customer demand. The cost of a dynamically priced item will vary depending on the time at which the item is sold, the number of unsold items in stock, and/or numerous other considerations.

Pricing is talked about a lot, and yet is poorly understood. While some level of quantitative thinking guides pricing, it is largely a result of category dynamics, consumer confidence, macro and micro economic forces, consumer psychology, competitor actions, and positioning of the product in the mind of the consumer. ...