Price Level Optimization
In practice, Price Optimization , remains an exclusive target for most companies for practical and operational reasons :
- Changing target: Optimal price changes by geography, by segment, by variant of the product, over time … Very few companies can afford the research required to optimize prices along these dimensions, and when they do, it is often only feasible for their ‘star products’!
- Constraints: Even if you know the price optimization for your offer, you may not be able to implement it, for practical reasons. Indeed, prices are often set for the year or optimal price in your country can conflict with optimal prices in neighboring countries / parallel imports…
PriValEdge helps its clients go about Price Optimization in a more pragmatic and systematic way:
- Focus: price optimization (or more realistically value capture performance improvement) on key products and markets for which you can implement quality research and modeling. Then, you can use these solid bases to expand good pricing to other markets and related products.
- Combined approaches: Whilst Value research (Choice based) is very powerful. Other techniques also can provide very reliable results by themselves or in conjunction with Research. Two in particular should be used , when available: Win/Loss analysis and Statistical analysis of transactional data (deriving the impact of price changes on demand).
- Constant testing & learning: Pricing test benches properly set up can provide great insights on value perception and willingness to pay trends to help adapt and maintain initial prices. Similarly adequate Pricing & Value monitoring and feedback systems can help companies constantly learn, adapt or improve prices.
The Power Pricer software developed by Privaledge was designed specifically to support Value measurement techniques & Price optimization not just for a single product, but capitalizing on a variety of techniques, analyses and models to expand Price Optimization to a large part of the portfolio.