Overview Optimization
LEARN MORE: Check out the latest release on Optimization, here.
What Is Optimization
Optimization is the act of making the most effective use of a resource to get the best results.
Pricing Optimization is the process of finding the most optimal price for your products, using mathematical analysis to determine your customer’s willingness to pay, and maximizing your company’s operating profit.
The Need for Pricing Optimization
Pricing calculation is already a complex process. Adding, that you must determine the right price, most competitive in the market, value-based for your customers, and avoiding margin leakage, can be very challenging.
What could go wrong?
Losing customers against your competitors
Hard to position your products in the right market
Missing relevant information - data issues
No confidence in your current pricing strategies
Lack of robust demand/offer models
Disconnected processes
Unavailable advanced pricing tools
No visibility/traceability of customer and products performance
Pricing Optimization in Pricefx
Pricefx offers a powerful tool that uses intuitive AI algorithms/logic to determine the right price for your products and customers.
Automated price optimization based on defined business goals and relevant user-defined constraint rules
Create models to segment your business and optimize pricing
Calculate the willingness to pay and price elasticity for segments/categories
Predict impacts on revenue and margin
Simultaneously optimize all pricing elements and price guidance - margins, promotions, list prices, etc.
Flexibility to change models and strategies as needed
Identify and recommend cross-sell and up-sell opportunities
Share optimized pricing and promotions in Quoting, ERP, and digital commerce platforms
Simulate, project, and analyze optimization results
Perform breakeven analysis - tracking results
Optimization Key Functionality
Pricefx offers two approaches to perform your pricing optimization:
The Machine Learning / Segmentation modeling
MAAI Optimization Engine
Model Types
The Model Type is a legacy implementation of the optimization models. Currently, all the functionalities are covered by Model Classes
This section is outdated.
Model Types represent the standard logic in Pricefx that does not require any technical configuration. You can customize your own model type to set up the optimization calculation the way your business requires.
The types are used to create an optimization model based on the defined data and optimization target.
Segmentation Models
Models are scientific/rules-based and data-driven standard segmentation ways for calculating price optimization. It provides a guidance computation based on price distribution, elasticity, among other parameters. Here you can create, execute and maintain your optimization models.
Policy Records
The Policy Records are a legacy implementation of the segmentation models. Currently, all the functionalities are covered by Model tables and model evaluations.
This section is outdated.
The Policy Records is a table with the optimization records that have been approved to be used in other functional areas as a result of the optimization process, which may include the segment number, transactions number, record dates, revenue, and margin results, among others.
Optimization Engine
The Optimization Engine is an AI-based optimization technology that models the entire pricing calculation, providing transparent price guidance in a waterfall view.
The Optimization Engine results provide Dashboard visibility with all the pricing potential calculation results. It simultaneously optimizes all the Waterfall elements, per segment and considers all the business strategies and constraints.
Getting Started with Optimization
Pricefx offers a Price Waterfall Accelerator Package that supports full implementation of a standard waterfall optimization model that uses the partition data. It deploys a set of logic to tackle your pricing optimization needs.
Before the Package implementation, it is necessary to determine your company’s needs for:
Product segmentation
Customer segmentation
Pricing strategy
Price optimization
Pricing guidance