Using AI To Change Pricing Paradigm

Pricing is the most effective way to raise the Net Profit. A 1% increase in the price equates to a 10% increase in Net Profit (McKinsey). The key for a robust pricing strategy is to switch the pricing paradigm and charge what every customer is willing to pay, not a blanket charge, and the key to that is AI.

AI is critical in outperforming competitors in the pricing domain, particularly compared to the market leader Excel, which accounts for 97% of all pricing decisions.

AI as a Pricing Solution

The history of AI started in World War 2, and recent progress has enabled us to leverage AI as we see it today.

AI has allowed the pricing domain in B2B business to flip the pricing paradigm and to look at the customer's willingness to pay using the companies' internal transaction data by:

• Micro-segmentation, where customers are grouped based on a similar behaviour pattern
• Micro dynamic, analysing the single customer behaviour changes over time
• Pricing alignment, optimising the price according to the customer price acceptance
• Feedback loop, analysing customer’s acceptance and behaviour changes and continually optimise

Role of AI Pricing Tool

The role of an AI application is to work alongside…