USE CASES APPROACH
We don’t believe in the one size fits all approach in pricing. Our solution will provide you with a library of algorithms that optimise for different use cases. You can choose from: multi-product pricing, psychological pricing, cross selling, etc…
Psychological pricing Use Case
Client wanted to have a large percentage of his products catalogue with .99 prices. Our goal was to boost the elasticity through the « .99 » price effect without jeopardizing the power of scientific based pricing methodologies
Challenges:
- Identify cases where it is better not to use a physcological price taking into account the environment of the price display.
- We demonstrated the existence of “inelastic” segments in which products are not price sensitive.
- While such situation represents an opportunity for Profit maximization, this is a challenge when you´re looking after volume and market share upwards.
Methodology:
- Identify the optimal price configuration based on our scientific elasticity based approach – Example: 87,12€ is my optimal price.
- Iterate around my “optimal” price, with the “.99” logic, with a different psychological price – Example: 84,99 vs 86,99 vs 87,99 vs 89,99.
- Measure how much the psychological price layer delivers incremental value & deploy the one delivering the best fit with target
Round-up/down the “optimal” price output defined through the customer selected use case optimization.
Achievements:
- Our experience shows that “psychological price” can deliver a 10% volume uplift on inelastic segment!
- Iterate around my “optimal” price, with the “.99” logic, with a different psychological price – Example: 84,99 vs 86,99 vs 87,99 vs 89,99.
- Measure how much the psychological price layer delivers incremental value & deploy the one delivering the best fit with target
Round-up/down the “optimal” price output defined through the customer selected use case optimization.
