Today we hear about data science as a breakthrough concept that has been established in society and day-to-day life: from the construction of political discourses to elite sport, where teams have a data analytics team to improve performance on the field. Commerce is no exception, and uses data science for pricing. Retailers use data analysis tools for their pricing strategies.
Price is the main attribute for consumers when choosing one product or service over another. Setting a price is an arduous task in which there are many factors to consider such as:
- Price elasticity.
- Competitors’ prices.
- Demand Curve.
- Market saturation.
- Production costs.
The use and application of this information is vital to get the perfect price for your items. However, the amount of data to be handled is too large to do it manually. To do this job in an efficient way, saving time and money, it is necessary to use pricing software that allows you to automate all the previous processes.
This knowledge will allow you to develop predictive models for your business, which will give you an advantage over your competitors and you will be able to forecast future market changes and adapt quickly to them.
These tools allow you to remain competitive with your rivals in real time. How? With dynamic pricing software. This platform suggests prices for your products according to pre-established rules, such as “be 6% cheaper than a particular competitor”, “be 2€ cheaper than the cheapest competitor” or “keep the profit margin of 15% for all my products”.
Setting an optimal price
Nowadays, many retailers are still convinced that the best selling price is the lowest. This narrow view of retailers is what leads to a race to the bottom or price war. The knowledge gained from data analysis will allow you to choose an appropriate pricing model that will help you beat the competition without risking the important profit margins.
On the other hand, data analysis is an effective method to help merchants of all kinds gather basic information for the design of a pricing strategy: customer segmentation. Knowing exactly which niche of the population will be most affected by your economic decisions will exponentially improve the conversion rate of your products.
For some time now, these tools have undoubtedly become a very important ally for companies, which required a lot of time and money to carry out these data collection and analysis processes..
To use this platform, it is as simple as uploading your catalog to the application and registering your competitors. The system will provide you, automatically and periodically, with reports with which you will be able to identify your position relative to the market. After all, the science of pricing data has become one of the best partners for businesses.