List Price Optimization enhances your business’s profitability through strategic pricing. It targets higher margin rates and allows precise price adjustments, either across the board or for specific product groups, ensuring effective revenue maximization. It helps align products based on attributes like brand or premium status, thus attracting the right customer segments willing to pay more.

The accelearator provides data-driven recommendations and insightful dashboards, displaying key metrics such as recommended list prices, expected revenue, and margins, which help in making informed decisions.

The simplified revenue and profit modeling considers past transactions, discounts, and rebates, offering a realistic view of financial impacts. Enhanced decision-making is supported by clear visualizations and detailed analysis available through the Glassbox Dashboard.

Key Benefits of List Price Optimization

Targeted Margin Rate Increase – you can strategically target and achieve a margin rate increase. This means you can set prices in a way that ensures higher profitability without alienating your customer base.

Customized List Price Adjustments -Whether you need to increase prices across the board or for specific product groups, with List Price Optimization you can allocate price changes precisely where they are needed.

Controlled Price Changes - Set limits on how much list prices can change, providing a safeguard against drastic fluctuations that could disrupt your market.

Defined Price Boundaries -With the ability to set lower and upper bounds for list prices, you can ensure that your prices remain within a competitive and profitable range.

What You Get: Outputs and Insights

The List Price Optimization model provides you with tailored recommendations for list prices by product. These recommendations come with a detailed assessment of their impact at both the product and customer levels. You can view these optimized prices within the Pricefx solution or access them through external systems via APIs.

Dashboard Insights

A set of intuitive dashboards allows you to review and assess the optimization results using charts and tables. These dashboards display key metrics such as recommended list prices, expected revenue, and margins, giving you a comprehensive view of your pricing strategy's effectiveness.

Simplified Approach to Optimization

The optimization process is straightforward and user-friendly. It uses a simplified model to define your pricing strategy and expected targets, starting from past transactions. Here’s how it works:

Starting Point: List Price. The list price is the initial price set for products. The revenue at list price is simply this price multiplied by the quantity sold.

Applying Discounts. Any discounts given are factored in to adjust the list price. The model uses historical discount rates to predict the impact on the new list prices.

Invoice Adjustments. Fixed amounts are added to account for on-invoice adjustments, giving you a clear picture of the invoiced revenue.

Rebates and Net Revenue. Rebates are also considered, adjusting the revenue further to calculate the net revenue. This step ensures that all potential deductions are accounted for, providing a realistic view of profitability.

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Approach to Optimization

Limitations

While the accelerator is powerful, it does have some limitations:

The model relies on past transaction data, so products with no sales history are not included in the optimization.

Currently, price elasticity (how sensitive demand is to price changes) isn’t used in the model but is planned for future updates.

There are no predefined extension points for adding custom features. Custom code is required for specific needs, which may affect the ease of updating the accelerator.