METHODS AND SYSTEMS FOR DETERMINING OPTIMAL PRICING FOR RETAIL PRODUCTS
A data warehouse system and application which analyzes historical sales and product data contained within a data warehouse to determine the best product prices across a set of products for a retailer. The application automatically creates statistical models, determines product price elasticity, and identifies and estimates product cross-sell and substitution effects. It does all modeling and analysis directly on the data within a data warehouse system, without any data extraction or manual data preparation. Output from the analytic application can be used operationally to set new product prices, or the application can be utilized as a decision support tool to help retailers understand the influencers on their product sales and profitability.
1 . A computer-implemented method for determining the optimal price for a retail product, the steps comprising:
a) establishing a database containing historical sales data for a plurality of products sold by a retail enterprise;
b) selecting a product for pricing analysis;
c) analyzing historical sales data contained in said database to determine how a change in price of said selected product effects sales volume and profit for said selected product;
d) analyzing historical sales data contained in said database to determine how a change in price of said selected product effects profits from sales of other products sold by said retail enterprise; and
e) combining the results of steps c) and d) to determine how a change in price of said selected product effects the combined profits of said selected product and said other products.
2 . The method of claim 1 , further comprising the step of displaying the results of said product pricing application.
3 . A computer-implemented method for determining the optimal price for retail products, the steps comprising:
a) establishing a database containing historical sales data for products sold by a retail enterprise;
b) selecting a plurality of products for pricing analysis;
c) for each one of said selected products, analyzing historical sales data contained in said database to determine how a change in price of said selected product effects profit from sales of said selected product;
d) for each one of said selected products, analyzing historical sales data contained in said database to determine how a change in price of said selected product effects profits from sales of other ones of said selected products; and
e) combining the results of steps c) and d) to determine a price for each one of said selected products which optimizes the combined profit from the sales of said plurality of products.
4 . The method of claim 3 , further comprising the step of displaying the results of said product pricing application.
5 . A system for determining optimal pricing for a retail product, comprising:
an electronic database containing historical sales data for a plurality of products sold by a retail enterprise; and
a computer-implemented product pricing application for:
a) analyzing historical sales data contained in said database to determine how a change in price of a selected product effects sales volume and profit for said selected product;
b) analyzing historical sales data contained in said database to determine how a change in price of said selected product effects profits from sales of other products sold by said retail enterprise; and
c) combining the results of steps a) and b) to determine how a change in price of said selected product effects the combined profits of said selected product and said other products.
6 . The system in accordance with claim 5 , further comprising an interface application for:
enabling a user to choose said selected product from said plurality of products sold by said retail enterprise; and
displaying the results of said product pricing application.
7 . A system for determining optimal pricing for a retail product, comprising:
an electronic database containing historical sales data for a plurality of products sold by a retail enterprise; and
a computer-implemented product pricing application for:
a) for each one of a plurality of selected products, analyzing historical sales data contained in said database to determine how a change in price of said selected product effects profit from sales of said selected product;
b) for each one of said selected products, analyzing historical sales data contained in said database to determine how a change in price of said selected product effects profits from sales of other ones of said selected products; and
e) combining the results of steps c) and d) to determine a price for each one of said selected products which optimizes the combined profit from the sales of said plurality of products.
8 . The system in accordance with claim 7 , fixer comprising an interface application for:
enabling a user to choose said selected products from said plurality of products sold by said retail enterprise; and
displaying the results of said product pricing application.