Pricing: the leap to advanced machine learning
Artificial intelligence (AI) is transforming the world of retail and provides an incredible opportunity to build competitive advantage in these turbulent times.
Every decision a retailer makes can — and we believe will — be informed by AI. This will result in unprecedented leaps in operational efficiency. Those that don’t invest today risk the same fate as those that ignored the e-commerce trend: they’ll disappear into the retail history books.
Pricing is a critical factor that can significantly influence a business’s success. Finding the optimal price point for a product or service can lead to increased revenue, market share and profitability. Understanding price elasticity plays a crucial role in determining the appropriate pricing strategy.
In this guide, we explore what price elasticity is, delve into traditional approaches to calculating it and then shift our focus to more modern techniques that leverage the power of AI. We’ll also discuss best practices for using price elasticity models effectively, including leveraging data from different sources, isolating the effects of price on demand, selecting the right algorithm and ensuring effective model training and tuning.