Market-based price optimization system
View Patent ↗A market-based software system that will help user-retailers manage price and inventories more effectively. The system will take advantage of available price and sales data to provide pricing recommendations that will achieve a retail user's objectives. The system will offer a solution that will allow for pricing improvement shortly after installation by utilizing data that is readily available. The system will recommend price changes that help a user achieve specified objectives such as contribution, sales volume, desired margins, and the like. The system can also collect and process price and sales data on an ongoing basis, which can enable improved estimates of customer price sensitivity and performance on a category-by-category basis. This data can be used to improve further pricing decisions.
1. In an electronic price optimization system comprising at least one computer processor and computer storage, a method for recommending to a user price changes for products of differing brands, the method comprising:
using a computer processor for:
determining whether any price-sensitivity baselines exist; and implementing, when any of said price-sensitivity baselines exist, price changes that incorporate said price-sensitivity baselines;
determining whether a brand of product has been frequently price-promoted in the past and, if so, recommending that the regular price of the product be increased;
identifying possible outlier products from market norms based on deviations of a user's sales from said market norms and recommending the price of said outlier products based on said deviations;
comparing the prices of a category of products to prices charged for said category of products by retailers competing with said user and recommending prices based on an overall strategy of said user;
determining whether the prices of products of specific brands are within acceptable ranges relative to a reference brand;
comparing the projected average margin from a category of products with objectives set by said user, and calculating a recommended price for said product based on said objectives; and
calculating across brands of a product a typical average relationship between unit sizes of said product and both price and margin per unit of said product.
2. The method of claim 1 wherein said calculating said typical average relationship uses a mathematical model that includes an intercept, a price weight and a flag for each brand of product and, using software to loop through each brand of the product, setting the appropriate flag to one and all others to zero, depending on the brand, to determine the individual weight of each brand.
3. One or more non-transitory processor readable storage devices having processor readable code embodied thereon for programming the one or more processors to perform a method for recommending to a user price changes for products of different brands, said products having a regular price, said method comprising:
determining whether any price-sensitivity baselines exist; and
implementing, when any of said price-sensitivity baselines exist, price changes that incorporate said price-sensitivity baselines;
determining whether a brand of product has been frequently price-promoted in the past and, if so, recommending that the regular price of the product be increased;
identifying possible outlier products from market norms based on deviations of a user's sales from said market norms and adjusting the price of said outlier products based on said deviations;
comparing the prices of a category of products to prices charged for said category of products by retailers competing with said user and recommending prices based on an overall strategy of said user;
determining whether the prices of products of specific brands are within acceptable ranges relative to a reference brand;
comparing the projected average margin from a category of products with objectives set by said user, and calculating a recommended price for said product based on said objectives; and
calculating across brands of a product a typical average relationship between unit sizes of said product and both price and margin per unit of said product.
4. The one or more non-transitory processor readable storage devices of claim 3 wherein calculating said typical average relationship uses a mathematical model that includes an intercept, a price weight, and an appropriate flag for each brand of product and, using software to loop through each brand of the product, setting said appropriate flag to one and all others to zero, depending on the brand, to determine the individual weight of each brand.