Price optimization software is designed to help businesses make the most profit possible by making strategic pricing decisions. But with so many different types of software on the market, which one is right for your business? In this article, we'll introduce you to the three main types of price optimization software so that you can make an informed decision.
There is a lot of talk about artificial intelligence (AI) and its potential to revolutionize various industries. The e-commerce sector is no exception, with AI-powered price optimization software becoming increasingly popular.
But what exactly is AI-driven price optimization software? And how does it work?
In a nutshell, AI-driven price optimization software uses artificial intelligence algorithms to automatically adjust prices in real time based on market conditions and customer demand. The aim is to maximize revenue and profits by selling at the optimal price point for each transaction.
To do this, the software takes into account a variety of data points, including competitor prices, historical data, current market trends, and more. It then uses this information to dynamically adjust prices up or down in order to stay one step ahead of the competition and seize every opportunity to increase sales and profits.
There are two kinds of AI-driven pricing software:
- AI-driven black box software
- AI-driven algorithm: No black box
AI-driven black box software
Black box AI is any artificial intelligence system whose inputs and operations are not visible to the user or another interested party. This means that we cannot see the logic that leads the AI to make the recommendations that it does. This also means that we cannot see if the AI has made errors or a biased conclusion because there is no room for human intervention.
AI-driven algorithm: No black box
With no black box, AI-algorithms are explainable and the business rules applied are visible to the user. This allows for human intervention in the case of exceptions to the rules or if the industry or organization needs to make a change in their pricing strategy.
Pros of an AI-driven algorithm with no blackbox:
- You can understand the logic of the results.
- It's constantly learning and improving itself based on the data you input.
- Can handle more data and variables than a human can.
There are many types of price optimization software available on the market today. However, not all of them are created equal. Some are better suited for certain types of businesses than others. Here, we will take a look at some of the most popular types of price optimization software to help you make a more informed decision about which one is right for your business.
The first type of price optimization software is ERP systems. ERP, or enterprise resource planning, systems are designed to help businesses manage their finances and operations more effectively. They often come with a suite of tools that can help businesses automate their processes and make better use of their data. Many ERP systems also include modules for pricing optimization.
Another popular type of price optimization software is CPQ or configure, price, and quote, systems. These systems are designed to help businesses create accurate quotes for their products and services. They often come with a range of features that can help businesses automate their quoting process.
Finally, there are web-based price optimization solutions. These solutions are typically cloud-based, meaning they can be accessed from anywhere in the world with an internet connection.
Business Intelligence softwares, just like ERP systems come with their own pricing modules. BI focuses on historical data of your pricing for assortment of products. This data can be a source of insights into your existing margins and revenues. However it does not track other external variables that have an effect on your prices for eg, competitor prices.
- Basic Price Optimisation Software
Basic price optimization software is designed to help businesses improve their pricing strategy with minimal effort. These tools typically offer features like price elasticity modelling and market analysis, allowing businesses to make informed decisions about their prices.
- Advanced Price Optimisation Software
Advanced price optimization software offers all the features of basic tools, plus a few extras that can take your pricing strategy to the next level. These include features like dynamic pricing, which automatically adjusts prices based on real-time data, and machine learning, which uses historical data to predict future customer behaviour.
Which kind pricing software is right for you?
(use pricing maturity model - watch the webinar on solutions based on the pricing phase)
- Phase 1 - Insights and Learn (BI should be good for you)
- phase 4 - you already have a process- (dynamic pricing- AI based software)
Do you want a free demo to try how SYMSON can help your business with margin improvement or pricing management? Do you want to learn more? Schedule a call with a consultant and book a 20 minute brainstorm session!