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For most companies, artificial intelligence is the new norm in pricing strategies. It is expected to be a game changer and hopefully it lives up to the hype. If you haven’t yet jumped on the AI hype train you might end up missing out on some of the most effective AI technologies. The prevalence of AI in companies is due to factors such as data collection, analysis, chatbots, cognitive computing, and much more. There is a lot your business gains from adopting artificial intelligence to optimize prices and profits.
Artificial Intelligence in Pricing
By now you probably understand what artificial intelligence entails. AI basically involves computers, or rather machines, thinking and acting like humans (only in a more efficient way). For instance, it takes you hours or days to collect and compare various price and profit values published by competitors. However, AI software such as pricing intelligence software collects such data and makes an assessment within the shortest time possible.
Pricing intelligence software utilizes special algorithms and AI technology to automate pricing tasks in your business. Ultimately, you save a lot of time and effort that you would otherwise waste on manually collecting and analyzing data from competitor sites. This software also recommends price values that are relatively better than your competitors’. In a nutshell, you get to create strong competitive strategies that give you an edge over your rivals.
4 Ways AI Allows Companies to Optimize Prices and Profits
There are many applications and benefits that are attached to using AI in price optimization. Artificial intelligence bolsters cybersecurity defense, improves customer service, predicts sales, and carries out data analysis. Now, how can AI help you optimize prices and profits for your business?
Identifying and eliminating unproductive customer segments thus leaving more resources for those that are crucial to achieving maximum profits.
Many online business owners use discounts to increase customer traffic to their stores. However, not all customer discounts or segments will be effective in your business. Some are just redundant and need to be eliminated to free up financial resources for more critical customer segments. This ensures that revenue leakages in your business are eradicated. With artificial intelligence, you can identify and eliminate such redundant customer discounts and segments.
AI automates the pricing rules in your revenue management system.
When you successfully integrate AI into your revenue management system, you can efficiently transform your revenue levers. For instance, using AI technology to optimize your prices could potentially boost your revenue by approximately 5%. AI ensures that your pricing rules align with the price fluctuations in the market thus increasing your revenue.
AI derives data by analyzing pricing patterns and volumes in the market; this gives you many insights that ensure you stay competitive.
Pricing patterns and trends are very crucial to every company’s existence and competitiveness. You can’t match your rivals or surpass their market share if you don’t know or understand the pricing volumes and patterns in the market. AI collects such data, analyzes it and gives you the requisite alerts about any changes and insights into pricing strategies.
AI also identifies what your many customers are willing to pay for your products thus optimizing your pricing, revenue and profits concurrently.
Imagine analyzing a spreadsheet manually in order to identify the pricing blindspots and effectiveness of discounts. That could take you days or weeks. But with AI, you get the final insights on what customers prefer. As long as you adopt artificial intelligence in pricing you don’t need to manually analyze customer pricing preferences.
Final Thoughts
Artificial intelligence shows your company reasonable pricing guidance by analyzing competitors’ sales measurables and suggesting reliable pricing strategies. The metrics and KPIs suggested by AI also give you greater insights into how you can avoid risks that could lead to significant losses. The best part is that you can customize AI to provide price fluctuation alerts specific to your needs. Well, why wouldn’t you want to adopt AI in your company’s pricing strategies?
