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60 Minutes to Better Pricing Analysis Using Python

Topic: Data
Walter Paczkowski, Ph.D.

This course addresses a common and very important business question: "How do I determine the price for my product?" This is a price level (i.e., the amount charged), not a price strategy, question. At the heart of the answer is what economists call the price elasticity. This course explains, develops, and illustrates quantitative methodologies for estimating the price elasticity of a product or service.

Why is this important? It is important simply because every product must have a price point in order to sell in the market. This price point, however, cannot be just written down. It must be derived from data reflecting customers' preferences and willingness to pay. A key part of this derivation is the price elasticity.

There are two overarching objectives for this course:

  1. Teach you how to estimate price elasticities using Python with survey-based and transactions-based data.
  2. Teach you how to develop a price point using Python.

At the end of one hour, you will understand the basics of designing and analyzing survey-based pricing studies such as conjoint analysis and analyzing transaction-based sales data to develop price elasticities and price points. Simulated survey and transaction data will be used to illustrate all concepts and methods.

What you'll learn-and how you can apply it

By the end of this live, hands-on, online course, you’ll understand:

  • The importance of a price elasticity for optimal pricing.
  • How to design and analyze a survey-based pricing study to develop a price elasticity and price point.
  • How to analyze transaction-based sales data to develop a price elasticity and price point.
  • How to use Python to do quantitative pricing analysis.

And you’ll be able to:

  • Describe and interpret price elasticities.
  • Design a basic conjoint pricing study using Python.
  • Analyze conjoint results for pricing using Python.
  • Estimate price elasticities using transactional data and Python.

This training course is for you because...

  • You are a market research or pricing professional in the private sector.
  • You have to develop price elasticities.
  • You want to expand your knowledge of quantitative pricing analysis methods.
  • You want to learn how to use Python for quantitative pricing analysis.

Prerequisites

  • You should have a basic working knowledge of Python and the use of Jupyter notebooks. Knowledge at the level of my Business Data Analytics Using Python course is sufficient.
  • Prior knowledge of pricing and price elasticities will be helpful, but not required.

Recommended follow-up:

About your instructor

  • Walter R. Paczkowski has a Ph.D. in Economics from Texas A&M University (1977). With over 40 years of extensive quantitative experience as an analyst in AT&T's Analytical Support Center, a Member of the Technical Staff at AT&T Bell Labs, head of Pricing Research at AT&T's Computer Systems division, and founder of Data Analytics Corp., he brings a wealth of knowledge to share about data analysis. His work as a market research consultant is focused on helping companies in a wide range of industries, such as telecommunications, pharmaceuticals, jewelry, food & beverages, and automotive to mention a few, to turn their market data into actionable market information. Walter is also currently on the faculty of the Department of Economics, Rutgers University (Adjunct) and was formerly with the Department of Mathematics & Statistics, The College of New Jersey (Adjunct). Walter is also the author of two analytical books: Market Data Analysis Using JMP (SAS Press, 2016) and Pricing Analytics (Routledge 2018) with a third forthcoming on quantitative methods for new product development (Routledge, 2019). You can learn more about Walter and his consulting company, Data Analytics Corp., at www.dataanalyticscorp.com.

Schedule

The timeframes are only estimates and may vary according to how the class is progressing

Introduction (5 minutes)

  • The importance of pricing
  • The importance of analytical methods for developing price points

Understanding price elasticities, the key to effective pricing (10 minutes)

  • Brief overview of the elasticity concept
  • Elasticity examples

Using survey data for elasticities: conjoint studies (20 minutes)

  • What is conjoint?
  • Basic conjoint study
  • Conjoint design
  • Conjoint estimation
  • Elasticities from a conjoint study

Using transaction data for elasticities: regression modeling (20 minutes)

  • Basic elasticity model based on historical sales data
  • Estimation and interpretation

Wrap-up (5 minutes)