Retail: Dynamic Pricing

Predict the effect of price changes on sales and improve margin even on temporary price reductions

Challenge:

Find the right price for products once launched

Business Goals:

+ Increase profit margins 
+ Increase sell through rates

Solution:

With increased competition, most products are sold on sale. Though beneficial for customers, frequent price discounts could hurt margins and profitability severely. 

Often, price discounts given out are either insufficient leading to unsold inventory or excessive leading to low profitability. Moreover, as competition changes prices, timing the discounts becomes very critical. One way to go about managing prices for retailers, is to benchmark discounts with competitors for similar products and predict the customer purchase elasticity with historical data. 

With Arch, the sales and merchandising team gets a tool that does just this – it predicts the price elasticity curve for various subcategories to find the right price of product accounting for seasonal behaviour. The net result is that the profitability improves even while marking down products.

 

Benefits:

+ Increased sell through rate by benchmarking discounts with competitors.

+ Increased margins per SKU by reducing prices in measured steps.

Would you like to start a project with us?